The rest of this paper is structured as follows. In section 2, we discuss previous literature that has addressed the questions in which we are interested. Section 3 shows basic demographic data for the United States. In section 4 we present and solve the theoretical model that we will be using. Section 5 applies the model to derive optimal paths of consumption and of asset prices in the face of demographic change. The section begins by considering an stylized case of population aging, which is used to develop intuition. It then examines the response of consumption and asset prices to actual forecast demographic change. Section 6.
