Ageing is a well established phenomenon. It has already struck in developed economies and soon developing economies, as well, will cope with the same process.Numerous studies have been conducted on the disruptive effects of ageing on the social security system, but far less concern has been dedicated to the possible disruptive effects on financial markets. And yet both microeconomic and investment theory predict that investors’ risk aversion is linked to their age. This researchaddresses the possible consequences of an economy in which an increasingly share of the population is in its retirement age. The CAPM model, despite a static approach, can capture dynamic trends, with the proper extensions . In particular, it will be shown that financial markets price risk according to the aggregate riskaversion of the investors. Empirical evidence seems to corroborate the theoretical model. Financial markets, however, are not likely to collapse.

Netspar, Network for Studies on Pensions, Aging and Retirement, is een denktank en kennisnetwerk. Netspar is gericht op een goed geïnformeerd pensioendebat.

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