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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. Robert J. Barro & Tao Jin, 2011. "On the Size Distribution of Macroeconomic Disasters," Econometrica, Econometric Society, vol. 79(5), pages 1567-1589, September.
    2. 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.
    3. Bakshi, Gurdip S & Chen, Zhiwu, 1996. "The Spirit of Capitalism and Stock-Market Prices," American Economic Review, American Economic Association, vol. 86(1), pages 133-157, March.
    4. McCleary, Rachel & Barro, Robert, 2003. "Religion and Economic Growth across Countries," Scholarly Articles 3708464, Harvard University Department of Economics.
    5. Rietz, Thomas A., 1988. "The equity risk premium a solution," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 117-131, July.
    6. Alan S. Blinder, 1973. "A Model of Inherited Wealth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(4), pages 608-626.
    7. Robert J. Barro & Rachel McCleary, 2003. "Religion and Economic Growth," NBER Working Papers 9682, National Bureau of Economic Research, Inc.
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