- Why Finance?
- Utilities, Endowments, and Equilibrium
- Computing Equilibrium
- Efficiency, Assets, and Time
- Present Value Prices and the Real Rate of Interest
- Irving Fisher's Impatience Theory of Interest
- Shakespeare's Merchant of Venice and Collateral, Present Value and the Vocabulary of Finance
- How a Long-Lived Institution Figures an Annual Budget Yield
- Yield Curve Arbitrage
- Dynamic Present Value
- Financial Implications of US Social Security System
- Overlapping Generations Models of the Economy
- Will the Stock Market Decline when the Baby Boomers Retire?
- Quantifying Uncertainty and Risk
- Uncertainty and the Rational Expectations Hypothesis
- Backward Induction and Optimal Stopping Times
- Callable Bonds and the Mortgage Prepayment Option
- Modeling Mortgage Prepayments and Valuing Mortgages
- Dynamic Hedging
- Dynamic Hedging and Average Life
- Risk Aversion and CAPM
- The Mutual Fund Theorem and Covariance Pricing Theorems
- Risk, Return, and Social Security
- Leverage Cycle and the Subprime Mortgage Crisis
- Shadow Banking: Parallel and Growing?
Will the Stock Market Decline when the Baby Boomers Retire?
In this lecture, we use the overlapping generations model from the previous class to see, mathematically, how demographic changes can influence interest rates and asset prices. We evaluate Tobin's statement that a perpetually growing population could solve the Social Security problem, and resolve, in a surprising way, a classical argument about the link between birth rates and the level of the stock market. Lastly, we finish by laying some of the philosophical and statistical groundwork for dealing with uncertainty.
Source: Open Yale Courses