Macrodynamic and Financial Effects of a Large-Scale Technology Change
We examine the implications of technological change which results in large-scale capital depreciation for the macrodynamic and financial properties of a dynamic general equilibrium model. In an economy where investors fear a capital-devaluing change in technology, the introduction of the possibility of such an event helps to resolve the equity premium and risk-free rate puzzles.
Volume (Year): 3 (2004)
Issue (Month): 1 (April)
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