2 Methods for Identifying Shocks and Estimating Impulse Responses3 Monetary Policy Shocks; 4 Fiscal Shocks; 5 Technology Shocks; 6 Additional Shocks; 7 Summary and Conclusions; Acknowledgments; Chapter 3: Macroeconomic Regimes and Regime Shifts; Abstract; 1 Introduction: Economic Recessions as...

In this paper, I investigate the scope of a model with exogenous habit formation - or 'catching up with the Joneses', see Abel (1990) - to generate the observed equity premium as well as other key macroeconomic facts. Along the way, I derive restrictions for four out of eight parameters for a...