The unprecedented growth of mutual funds has raised questions about the impact of mutual fund flows on stockand bond prices. Many believe that the equity bull market of the 1990's is atributable to the huge flows of funds into equity mutual funds during this period, and that a withdrawal of...

Ongoing questions on the historical mean and standard deviation of the return on equities and bonds and on the equilibrium demand for these securities are addressed in the context of a stationary, overlapping-generations economy in which consumers are subject to a borrowing constraint. The key...