University of Minnesot Ph.D. dissertation. July 2010. Major: Economics. Advisor: Larry E. Jones and Narayana R. Kocherlakota. 1 computer file (PDF); vi, 99 pages, appendices A-B.

The representative agent model (RA) has dominated macroeconomics for the last thirty years. This model does a reasonably good job of explaining the co-movements of consumption, investment, GDP and employment during normal times. But it cannot easily explain movements in asset prices. Two facts...