Has anybody seen any work done on negative wealth effect ie effect on consumption as wealth/networth goes down? Do positive and negative changes in wealth have the same magnitude effect on consumption ? Do these effects kick in with same lag i.e. does a drop in wealth lead to a lower consumption, (if any !) after a longer period than an increase in wealth would increase consumption?
Koushik ----- Original Message ----- From: "Fred Foldvary" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Friday, January 10, 2003 8:51 AM Subject: Re: FW: History shows paths to market crashes, but lessons seem forgotten > > In a few years, this movement of baby boomer money into safe havens > should drive down both the price of stocks and the yield on bonds. > > ~Alypius Skinner > > No, for two reasons: > > 1) Many who retire will not sell all their stocks. > If they get an annuity, the stocks are just transferred to the insurance > company. The reality of p=r/i will in the long run prevail. > > 2) Stock markets are increasingly global, and if there is good value in US > stocks, Asians and Europeans will buy them. > > Fred Foldvary > > ===== > [EMAIL PROTECTED] > >
