Household demand for financial assets: A life-cycle analysis

This paper examines the demand for major financial assets by householders during different stages of their lives using the life-cycle theory of consumption and saving and cross-sectional data from the Survey of Income and Program Participation (SIPP). Unlike most studies on money demand, data used in this study are microeconomic and free from the identification problem frequently encountered in the literature. Regression results show that the propensities to hold financial assets out of labor income, wealth, and net worth differ substantially among young, middle-age, and old householders. Also, the impacts of relative rates of return and demographic variables on asset demands vary among householders of different ages.