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Price Expectations and Household's Demand for Financial Assets



The effects of price expectations on consumption and saving has received relatively little attention, especially at the micro level. This paper's effort is addressed to this void. More specifically, the paper's primary purpose is to investigate whether it is possible to discern empirically a relationship between individually held price expectations and decisions of households to hold particular types of assets. To this end, I have analyzed aggregate time - series data from the National Income Accounts and the Flow-of-Funds and two bodies of micro household data, each involving several thousand households and each containing fairly detailed information on price expectations.

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