TY  - JOUR
AU  - Abel,Andrew B.
TI  - The Effects of a Baby Boom on Stock Prices and Capital Accumulation in the Presence of Social Security
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9210
PY  - 2002
Y2  - September 2002
UR  - http://www.nber.org/papers/w9210
L1  - http://www.nber.org/papers/w9210.pdf
N1  - Author contact info:
Andrew B. Abel
Wharton School
University of Pennsylvania
2315 Steinberg Hall - Dietrich Hall
Philadelphia, PA  19104-6367
Tel: 215/898-4801
Fax: 215/573-7244
E-Mail: abel@wharton.upenn.edu
AB  - Is the stock market boom a result of the baby boom? This paper develops an overlapping generations model in which a baby boom is modeled as a high realization of a random birth rate, and the price of capital is determined endogenously by a convex cost of adjustment. A baby boom increases national saving and investment and thus causes an increase in the price of capital. The price of capital is mean-reverting so the initial increase in the price of capital is followed by a decrease. Social Security can potentially affect national saving and investment, though in the long run, it does not affect the price of capital.
ER  -