February 12, 1996 (First draft: May 17, 1995) <p>We examine the equity premium puzzle with the perspective of the theory of Rational Beliefs Equilibrium (RBE) and show that from the perspective of this theory there is no puzzle. In an RBE agents need to be compensated for the endogenously...</p>

September 9, 1997 (Updated November 28, 1998) <p> The theory of Rational Belief Equilibria (RBE) offers a unified paradigm for explaining market volatility by the effect of "Endogenous Uncertainty" on financial markets. This uncertainty is propagated within the economy (hence "endogenous") by the...</p>

Ex-ante cost of aggregate fluctuations consist of all individual and social cost expanded by optimizing agents aiming to prevent or reduce fluctuations of consumption. These are measured by the cost of resources used to attain the level of consumption volatility currently observed. This paper...