In this paper we critically examine the main workhorse model in asset pricing theory, the Lucas (1978) tree model (LT-Model), extended to include heterogeneous agents and multiple goods, and contrast it to the benchmark model in financial equilibrium theory, the real assets model (RA-Model)....

A great many of the most important developments in modern economics were first revealed in the pages of Econometrica. This selection of readings from that journal is the third in a series and contains its editors' choice of the best articles in the general area of macroeconomics and capital...

The majority of results in the literature on general equilibrium are not for an economy (i.e. given an endowment and preferences), but rather, for a set of economies (i.e. a set of endowments given preferences). Therefore, we argue that the most appropriate robustness result requires perturbing...