Paoli, Bianca De; Scott, Alasdair; Weeken, Olaf - Society for Computational Economics - SCE - 2006
risk premia and the slope and level of the yield curve. In a world of technology shocks only, increasing the degree of real … rigidities raises risk premia and increasing nominal rigidities reduces risk premia. In a world of monetary policy shocks only …. Using a second-order numerical solution to the model, we examine bond and equity returns, the equity risk premium, and the …