the zero-borrowing constraint is a lot weaker. More surprisingly, when I introduce idiosyncratic labor income risk in an …This paper analyzes how the combination of borrowing constraints and idiosyncratic risk affects the equity premium in … idiosyncratic risk increases the equity premium by 70 percent, which means that the mechanism described in Constantinides, Donaldson …

-forming preferences raise risk aversion, increasing the importance of the precautionary savings channel through which volatility … savings is influenced by fluctuations in the volatilities of disturbances that hit the economy. It uses a simple New Keynesian …

We show that countries that take on more international risk are rewarded with higher expected consumption growth …. International risk is defined as the beta of a country’s consumption growth with world consumption growth. High-beta countries hold … more foreign assets, as predicted by the theory. Despite the positive effects of beta, a country's idiosyncratic volatility …

a parsimonious set of prior parameters, the model generates a sizeable equity premium and a low risk-free rate even with … a power utility function, low risk aversion, and absence of persistence in growth rates. Raising the prior uncertainty … on consumption growth induces a "flight to safety" that results in lower risk-free rates, higher equity premium, and …