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For United States annual data that include World War II, the estimated multiplier for temporary defense spending is 0.4-0.5 contemporaneously and 0.6-0.7 over 2 years. If the change in defense spending is “permanent” (gauged by Ramey's defense-news variable), the multipliers are higher by...
Persistent link: https://www.econbiz.de/10013130131
We derive an option-pricing formula from recursive preference and estimate rare disaster probability. The new options-pricing formula applies to far-out-of-the money put options on the stock market when disaster risk dominates, the size distribution of disasters follows a power law, and the...
Persistent link: https://www.econbiz.de/10012182396