Direct preferences for wealth, the risk premium puzzle, growth, and policy effectiveness
In this paper, we consider social status, the spirit of capitalism, fiscal policies, and asset pricing in a stochastic model of growth. With specific assumptions on the production technology, preferences, and stochastic shocks, we derive the explicit solutions to the growth rates of consumption and savings and equilibrium returns on all assets. We further demonstrate how fiscal policies, the spirit of capitalism, and stochastic shocks affect growth, asset pricing, and welfare.
|Date of creation:||2001|
|Date of revision:|
|Publication status:||Published in Journal of Economic Dynamics and Control, Volume 26, Issue 2, February 2002, Pages 247-270|
|Contact details of provider:|| Web page: http://cema.cufe.edu.cn/|
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