Jianakoplos, Nancy Ammon
Inflation and the Accumulation of Wealth by Older Households, 1966-1976
In: Level and Composition of Household Savings. P. Hendershott, ed. Cambridge, MA: Ballinger Publishing Co., 1985
Cohort(s): Older Men
Publisher: Ballinger Publishing Co.
Keyword(s): Assets; Family Size; Inflation; Retirement; Wealth;

Permission to reprint the abstract has not been received from the publisher.

The principal finding of this paper is that both anticipated and unanticipated inflation-related real capital gains have a significant impact on individual household wealth accumulation, but the two effects operate in different directions. Anticipated real capital gains are found to reduce wealth accumulation in a manner analogous to the traditional wealth effect. Because unanticipated capital gains do not enter into the consumption-planning process, these gains are initially added to accumulated assets. Since capital gains vary across households because of differences in portfolios, these results suggest that the composition, in addition to the magnitude, of wealth influence saving decisions.