The Long-Horizon Benefits of Traditional and New Real Assets in the Institutional Portfolio

South Korea became an aging society in 2000 and will become a super-aged nation in 2026. The extended life expectancy and earlier retirement make workers’ preparation for retirement more difficult, and that hardship might lead to poorer living conditions after retirement. As annuity payments are, in general, not enough for retirees to maintain their previous standard of living after retirement, retired households would have to liquidate their financial and real assets to cover household expenditures. As housing takes the biggest share of households’ total assets in Korea, it seems to be natural for retirees to downsize their houses. However, there is no consensus in the housing literature on housing downsizing, and the debate is still ongoing. In order to understand whether or not housing downsizing by retirees occurs in Korea, this paper examines the impact of the timing of retirement on housing consumption using an econometric model of housing tenure choice and the consumption for housing. The results show that the early retirement group living in more populated region does not downsize the house, while the timing of retirement is negatively associated with housing consumption for the late retirement group living in the peripheral region.

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Inflation and the Price of Real Assets

SSRN Electronic Journal ◽

10.2139/ssrn.3535330 ◽

2020 ◽

Author(s):

Matteo Leombroni ◽

Monika Piazzesi ◽

Martin Schneider ◽

Ciaran Rogers

Keyword(s):

Real Assets

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Investing in Real Assets

Plan Your Financial Future ◽

10.1007/978-1-4842-3637-6_10 ◽

2018 ◽

pp. 137-146

Author(s):

Keith R. Fevurly

Keyword(s):

Real Assets

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Real Assets, Liquidation Value and Choice of Financing

SSRN Electronic Journal ◽

10.2139/ssrn.1721844 ◽

2010 ◽

Cited By ~ 1

Author(s):

Peng Liu ◽

Crocker H. Liu ◽

Zhipeng Zhang

Keyword(s):

Real Assets

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Liability-Driven Investment for Pension Funds: Stochastic Optimization with Real Assets

SSRN Electronic Journal ◽

10.2139/ssrn.3832434 ◽

2021 ◽

Author(s):

Chul Jang ◽

Andrew D. Clare ◽

Iqbal Owadally

Keyword(s):

Stochastic Optimization ◽

Pension Funds ◽

Real Assets

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The Old Story: Economic Globalization, the Market Consensus, and the New State Religion

Rebirth of the Sacred ◽

10.1093/oso/9780199942367.003.0011 ◽

2013 ◽

Author(s):

Robert Nadeau

Keyword(s):

New York ◽

New York Times ◽

Invisible Hand ◽

Investment Banks ◽

Futures Contracts ◽

Neoclassical Economic Theory ◽

Deficit Spending ◽

Derivatives Markets ◽

Editorial Page ◽

Real Assets

The new york times editorial page attributed the lack of regulation that resulted in the meltdown of the financial markets in 2008 to the “Bush administration’s magical belief that the market, with its invisible hand, works best when it is left alone to self regulate and self correct.” But what the editorial failed to mention is that the Bush administration’s $700 billion economic stimulus plan and the Obama administration’s $789 billion American Recovery and Reinvestment Act were both predicated on this magical belief. The fundamental assumption in these plans was that the meltdown occurred because the self-correcting and self-regulating dynamics associated with the invisible hand ceased to function properly. And the intent of the plans was to create market conditions in which these dynamics could begin to function properly with a massive infusion of capital generated by deficit spending. This meltdown began after the collapse of the markets for derivative contracts that allow buyers to hedge against economic gains or losses. In the parlance of mainstream economists, a derivative is an agreement between two parties that the value of something is determined by the price movement of something else, and hedging allows a buyer or seller to protect assets or incomes against future rises in prices. In derivatives markets, debt is used to generate surplus capital, and this surplus is used to borrow increasingly larger sums of money in a process economists call financial leveraging. Traditional derivative trading was in commodity-related futures contracts, and the amount of debt that could be used as financial leverage was highly regulated. In these markets, buyers could hedge against unpredictable changes in the prices of real assets, such as wheat or cotton, and each commodity was traded separately. But this situation changed dramatically after December 2000, when the U.S. Congress banned the regulation of derivatives by passing the Commodity Futures Modernization Act. The rationale for passing this bill, which was largely written by representatives of the investment banks that would later make enormous profits in derivatives trading, appealed to two assumptions in neoclassical economic theory.

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Inescapable Role of Real Currency Convertibility

10.4018/978-1-7998-8302-9.ch006 ◽

2022 ◽

pp. 74-85

Keyword(s):

Economic Fluctuations ◽

Paper Money ◽

On Demand ◽

Paper Currency ◽

Real Assets

The invention of paper money created a major new problem: how to ensure its value. Historically, the most reliable means of preserving and stabilizing the value of paper currency has been for those issuing paper money to guarantee to convert their notes, on demand, into real assets, at a specified rate of exchange. The most common asset used for this has been gold, which has been effective in preserving the value of currency over a century or more, but this has not prevented serious economic fluctuations. Consequently, for more than a century, economists have argued that it would be more effective to make currency convertible on demand into a range of commodities. Unfortunately, efforts to devise a means of achieving this have not succeeded to date.

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