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Financial markets are central to the transmission of uncertainty shocks. This paper documents a new aspect of the interaction between the two by showing that uncertainty shocks have radically different macroeconomic implications depending on the state financial markets are in when they occur....
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This paper studies the implications of heterogeneous capital gain expectations on output and asset prices. We consider a disequilibrium macroeconomic model where agents' expectations on future capital gains affect aggregate demand. Agents' beliefs take two forms - fundamentalist and chartist -...
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, creates conflicts between short-term considerations a discounting scheme has to be consistent with observed behaviours and … long-term ethical issues a discounting scheme must not favour the current generation over future ones. To overcome this … conflict, the present article proposes a prescriptive consumption discounting scheme that applies different discount rates (i …
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