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Rare-Disasters, the Spitit of Capitalism, Oversaving, and Asset Pricing

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  • Tao Jin
  • Heng-fu Zou

Abstract

Rare disasters become increasingly important for understanding asset pricing, and the spirit of capitalism has been successful in explaining various issues in economic growth, savings behavior, and asset pricing. However, pervious studies don't reveal the connection of these two ideas. This paper tries to fill the gap in the literature and demonstrates the similarities in consumption decision making and savings behavior implied by models of rare disasters and spirit of capitalism, and analyzes interesting implications of this connection in asset pricing.

Suggested Citation

  • Tao Jin & Heng-fu Zou, 2010. "Rare-Disasters, the Spitit of Capitalism, Oversaving, and Asset Pricing," CEMA Working Papers 470, China Economics and Management Academy, Central University of Finance and Economics.
  • Handle: RePEc:cuf:wpaper:470
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    References listed on IDEAS

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    1. Zou, Heng-fu, 1994. "'The spirit of capitalism' and long-run growth," European Journal of Political Economy, Elsevier, vol. 10(2), pages 279-293, July.
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