I present a generalized model that structurally nests both "catching up with the Joneses" (external habit) and "time nonseparable" (internal habit) preference specifications. The model's asset pricing implications are confronted with the observed aggregate US consumption and asset returns data...

Abstract This paper derives approximate analytical solutions for various financial assets in the production economy with monetary shocks. Both technology and monetary shocks drive the dynamics of various financial assets. Special cases of permanent and transitory shocks are considered. The...