CentER

Stefan Hochg|rtel

Abstract:
This thesis presents four topics on households' portfolio choices. Empirically, households do not hold well-diversified wealth portfolios. In particular, they refrain from putting their savings into risky assets. We explore several ways that might help explaining this observation. Using Dutch microdata, we pay particular attention to taxes and transactions costs as explanatory factors and consider precautionary motives. We also devote a chapter to the interplay between financial asset holdings and housing wealth, and argue for the existence of spill-over effects across asset demands when consumers face nonnegativity type constraints. The empirical models presented have a static character. To better understand the dynamics of saving and portfolio behavior, we simulate a life cycle-consumption model with portfolio choices for impatient and liquidity constrained consumers.