empirical proxy of an aggregate shock to the cost of equity issuance, which we interpret as a financial shock. We show that this … shock captures systematic risk, and that exposure to this shock helps price the cross section of stock returns including … book-to-market, investment, and size portfolios. We propose a dynamic investment-based model with stochastic equity …

-level equity portfolios. An application of the theory to the empirical results shows (a) large predicted levels of risky asset …

fluctuations in savings on domestic investment and the current account? In the long run, we find that countries invest the marginal … to smooth consumption, but also domestic investment. To achieve this, they use foreign assets as a buffer stock …

values and optimal investment decisions. The method is quite general, and is illustrated both analytically and numerically …, on mine values and investment decisions. Although the tax policies are found to have the expected effects on asset values …, the effects on investment decisions are sometimes perverse. An increase in the income tax rate may encourage investment …