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|Title:||The Influence of Inflation on Consumer Asset Choice|
|Author(s):||Bradley, Michael Gerard|
|Department / Program:||Economics|
|Degree Granting Institution:||University of Illinois at Urbana-Champaign|
|Abstract:||This thesis is concerned with the influence uncertainty has upon the consumer asset portfolio. Of particular interest is whether inflation uncertainity induces changes in asset portfolio weights. The influence inflation and inflation uncertainity have upon the consumer asset portfolio has recently received considerable empirical attention in macroeconomics.
Macroeconomists permit real assets which yield use value as a component of their return to be part of the consumer's asset portfolio. In doing so they have invalidated the theoretical bases of their work. Previous portfolio theories fail to accommodate two important features of these assets: their marginal and average rates of return differ; they cannot realistically be regarded as riskless.
In this work consumer asset choice is examined in the context of a microeconomic uncertainty model. This life-cycle asset-portfolio model is intended to support the macroeconomic discussions. The theory enlarges the traditional portfolio possibility set to include real assets which yield use value as a component of their returns.
A special application of the model examines how inflation uncertainty affects consumer asset choice. The hypothesis derived from this application is tested empirically using a unique longitudinal data set. The empirical work supports the theoretical hypothesis that inflation induces individuals to increase the proportion of their wealth held in the form of real assets and that inflation uncertainty compounds this shift.
Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 1982.
|Date Available in IDEALS:||2014-12-16|