We study the impact of income disaster-which can be triggered by various reasons such as pandemics and technological disruption-on Friedman's permanent income hypothesis. Although the hypothesis is still retained, our general equilibrium model offers two insights. First, with income disaster the...

In the present paper it will be shown that in country level economic growth has a positive impact on stock prices in the long run. This study refers annually to the Western Europe, Japan and the United States during the period 1999-2007. Therefore, any factor favoring economic growth should be...

What are the main drivers of fluctuations in the aggregate US stock market? In this paper, we attempt to resolve the long-lasting debate surrounding this question by designing and solving a consumption-based asset pricing model which incorporates stochastic volatility, long-run risks in...

In the present paper author will try to point out that government debt as a percentage of GDP has a negative impact on stock prices in the long run, while entrepreneurial caliber has a positive effect on stock prices in the long run. Data are annual and cover Western European economies for the...

This paper investigates the effects of stock market wealth on consumer spending. Traditional macroeconometric models estimate that a dollar's increase in stock market wealth boosts consumer spending by 3-7 cents per year. With the substantial 1990s rise in stock prices, the nature and magnitude...