Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 9, 2020 erstellt
Beschreibung:
We propose debt-wealth constraints to separate all households into constrained and unconstrained groups. A constrained household is subject to debt payment dues with limited wealth. However, an unconstrained family has cash reserves. Since cash reserves can absorb investment losses, only unconstrained households can exercise lifelong mean-variance optimizations on risky investments. Constrained (unconstrained) households are conservative (aggressive) in their risk tolerance. We test differential decisions through fixed income mutual fund data. When funds deliver low returns, conservative investors run, but aggressive investors stay engaged. Fund flows to funds with high-risk exposure are significantly higher than flows to funds with low-risk exposure