Computable general equilibrium (CGE) modeling is an attempt to use general equilibrium theory as a tool for analysis of resource allocation and income distribution issues in market economies. Since the beginning of the 1990s, CGE modeling has been widely used for analysis of environmental policy...

Farmer and Wendner (2004) consider the sensitivity of policy effects, as implied by dynamic multi-sector computable general equilibrium models, with respect to the specification of capital and investment aggregation. They demonstrate that (small) differences in the specification of capital and...

Previous writers have attempted to resolve the equity premium puzzle by employing a utility function that depends on current consumption minus (or relative to) past habit consumption. This paper points out that an individual's current utility may also depend upon how well off in the recent past...

Simulating a realistic-sized equity premium in macroeconomic models has proved a daunting challenge, hence the "equity premium puzzle." "Resolving'' the puzzle requires heavy lifting. Precise choices of particular preferences, shocks, technologies, and hard borrowing constraints can do the...

We explicitly solve for the aggregate asset prices in a general equilibrium Lucas endowment economy with two agents who are heterogeneous in their time-nonseparable preferences. Time-nonseparability is modeled either as internal or external habit preferences. Equilibrium quantities -- equity...

The theoretical literature presumes generational risk is large enough to merit study and that such risk can be meaningfully shared via appropriate government policy. This paper questions these propositions. It develops an 80-period OLG model to directly measure generational risk and the extent...

We explicitly solve for the aggregate asset prices in a discrete-time general-equilibrium endowment economy with two agents who differ with respect to their preferences for risk aversion and sensitivity to habit, either internal or external. We compute equilibrium quantities -- equity premium,...

In the vast majority of recursive dynamic CGE models, the savings rate is constant and exogenous. Intertemporal CGE models, by contrast, are solved simultaneously for all periods, and agents optimize intertemporally. But the theoretical consistency of intertemporal optimization is achieved only...