Kurz, Mordecai - Department of Economics, Stanford University
volatility. <p> Section I starts by reviewing the standard assumptions underlying models of Rational Expectations Equilibria (REE … anomalies in relation to the assumptions of REE : (i) Why are asset prices much more volatile than their underlying fundamentals …? (ii) The equity premium puzzle: why under REE the predicted riskless rate is so high and the equity risk premium so low …