This paper reexamines the Equity Premium Puzzle for the German stock market with control for inflation and taxation. Two methods for relaxing the assumption of aggregate consumption being equal to aggregate dividends are compared: the leverage approach and the usage of a bivariate stochastic...

This paper reexamines the Equity Premium Puzzle for the German stock market with control for inflation and taxation. Two methods for relaxing the assumption of aggregate consumption being equal to aggregate dividends are compared: the leverage approach and the usage of a bivariate stochastic...

The book is the first one to analyse the "Equity Premium Puzzle" and the "Risk-free Rate Puzzle" in the German capital market. It starts with a thorough discussion of the available theoretical models and then goes on to perform various empirical studies, applying two recent approaches for the...