Pastor and Stambaugh (2012) demonstrate that from a forward-looking perspective, stocks are more volatile in the long run than they are in the short run. We investigate how the economic constraint of non-negative equity premia aspects predictive variance. When investors expect non-negative...

In this paper we develop a new Early Warning System (EWS) of Banking Crises based on a new estimated indicator of the gap between the observed private credit ratio and its long-term structural level.