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"In the presence of infrequent but observable structural breaks, we show that a model in which the representative agent is on a rational learning path concerning the real consumption growth process can generate high equity premia and low risk-free interest rates. In fact, when the model is...
Persistent link: https://www.econbiz.de/10002917582
additional form of capital spending-that of improvements. The analysis examines a unique long-run data set on Swiss road spending. …
Persistent link: https://www.econbiz.de/10005490928
Inflation magnifies the distorting effects of taxation when the tax treatment of interest income and expense is not fully indexed to inflation. The distortion involves a real interest tax wedge which is the difference between the real before tax interest rate that influences fully taxed...
Persistent link: https://www.econbiz.de/10005490970
taste shocks affecting their marginal utility of current consumption. Agents accumulate capital and have access to a …
Persistent link: https://www.econbiz.de/10011027314
We study the effects of money (anticipated inflation) on capital formation. Previous papers on this topic adopt reduced …-form literature. The analysis reduces the previously large gap between mainstream macro and monetary theory. …
Persistent link: https://www.econbiz.de/10005077876
We introduce adaptive learning behavior into a general equilibrium lifecycle economy with capital accumulation. Agents … form forecasts of the rate of return to capital assets using least squares autoregressions on past data. We show that, in … persistent excess volatility in returns to capital. We explore a quantitative case for these learning equilibria. We use an …
Persistent link: https://www.econbiz.de/10005352849
The standard measures of nominal capital formation show the United States investing a proportion of GDP much lower than … have been coming closer and closer to those of the other countries. A broader measure of capital formation, more consonant … investing an above average share of total output in the most recent period 1990-1994. Real capital formation per capita and per …
Persistent link: https://www.econbiz.de/10005352975
that can be used to produce government capital. For a reasonable calibration, we find that government spending increases in … larger the costs that the economy faces to reallocate resources (capital and labor) across sectors, the smaller the optimal …
Persistent link: https://www.econbiz.de/10009206324
Conventional theory suggests that fiat money will have value in capital-poor economies. We demonstrate that fiat money … may also have value in capital-rich economies, if the price of capital is excessively volatile. Excess asset … short-run return to capital. One advantage of fiat money is that its expected return is not linked directly to news …
Persistent link: https://www.econbiz.de/10008583247
This article describes the changes in the concentration of wealth among U.S. households between 1983 and 1992, a period … which nearly coincides with the most recent business cycle. The distribution of wealth has received popular attention … wealth and wealth per household increased over the cycle; rich and poor households enjoyed an approximately equal gain, in …
Persistent link: https://www.econbiz.de/10005490895