Financial Giffen Goods: Examples and Counterexamples
12 Pages Posted: 5 Jun 2007
Date Written: June 5, 2007
In the basic Markowitz and Merton models, a stock's weight in efficient portfolios goes up if its expected rate of return goes up. Put differently, there are no financial Giffen goods. By an example from mortgage choice we illustrate that for more complicated portfolio problems Giffen effects do occur.
Keywords: Finance, portfolio choice, Giffen good, mortgage planning
JEL Classification: G11
Suggested Citation: Suggested Citation