that central banks incur for implementing Taylor rule type policies.

By solving an incomplete-markets model of multiperiod bond pricing {\it backwards}, we show that the mean and autocorrelation properties of the term premiums in the yield curve can be a reflection of the temporal distribution of uninsurable income shocks, {\it i.e.}, the term structure of...

Empirical rejections of life cycle models of aggregate consumption are reviewed and an alternative specification is proposed. Observable implication of Euler equations are used to estimate parameters of the utility function using Generalized Method of Moments using monthly U.S. post-war data....