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A dynamic economy with markets of equities and bonds is considered. The rational expectations equilibrium is defined in an asset pricing model and a condition under which the Modigliani-Miller theorem holds is shown. In an aggregate model the existence of a rational expectations equilibrium is...
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This paper investigates the growth impact of Information and Communication Technologies (ICT) in an economy consisting of three sectors: ICT-producing, ICT-using, and non-ICT-using. The ICT progress causes falling prices of the consumption and intermediates produced by the ICT-using sector,...
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assume a constant consumption-wealth ratio that constrains the boundary conditions, hence influencing the coefficient of the … risk premium. The main contribution of our paper is that we drop the assumption of a constant consumption-wealth ratio. We … terminal condition of wealth with and without bequests. We also simulate the stochastic optimization with a self …
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