• 1 Introduction2 Model2.1 Agents’ Preferences and Endowments2.2 Technology2.3 Budget Constraints2.4 Markets and Equilibrium3 Solution3.1 Labor Markets3.2 Intertemporal Consumption Allocations3.3 Dynamics of the Stochastic Discount Factor and the Con-sumption Share3.4 Stock Price4 Qualitative Features of the Model4.1 Overlapping Generations and the Risk-Free Rate Puzzle4.2 Heterogenous Agents4.3 Dividends and Labor5 Quantitative Results5.1 Parameter Choice and Calibration5.2 Unconditional Moments5.3 Conditional Moments6 Discussion and Extensions6.1 The Dynamics of Cross-Sectional Inequality6.2 The Link between Low Risk Aversion and Entrepreneurship7 ConclusionA AppendixReferences