Showing 1 - 10 of 59
This paper shows that the consumption-based asset pricing model (C-CAPM) with low-probability disaster risk rationalizes large pricing errors, i.e., Euler equation errors. This result is remarkable, since Lettau and Ludvigson (2009) show that leading asset pricing models cannot explain sizeable...
Persistent link: https://www.econbiz.de/10010338284
This paper provides an explanation why garbage as a measure of consumption implies a several times lower coefficient of relative risk aversion in the consumption-based asset pricing model than consumption based on the official National Income and Product Accounts (NIPA): Unlike garbage, NIPA...
Persistent link: https://www.econbiz.de/10010486748
This paper tests how subjects behave in an intertemporal consumption/saving experiment when borrowing is allowed and whether subjects treat debt differently than savings. Two treatments create environments where either saving or borrowing is required for optimal consumption. Since both...
Persistent link: https://www.econbiz.de/10010487750
On average, young people underestimate whereas old people overestimate their chances to survive into the future. We employ a subjective survival belief model proposed by Ludwig and Zimper (2013), which can replicate these patterns. The model is compared with hyperbolic discounting within a...
Persistent link: https://www.econbiz.de/10010340559
We study the effects of a labor-intensive health care sector within an R&D-driven growth model with overlapping generations. Health care increases longevity and labor participation/productivity. We examine under which conditions expanding health care enhances growth and welfare. Even if the...
Persistent link: https://www.econbiz.de/10010338973
It is common practice to estimate the volatility-growth link by specifying a standard growth equation such that the variance of the error term appears as an explanatory variable in this growth equation. The variance in turn is modelled by a second equation. Hardly any of existing applications of...
Persistent link: https://www.econbiz.de/10010341161
Growth is associated with (i) shifts in the sectoral structure of the economy, (ii) changes in relative prices and (iii) the Kaldor facts. Moreover, (iv) cross-sectional data shows systematic differences in the expenditure structure across income groups. This paper presents a growth model which...
Persistent link: https://www.econbiz.de/10010342236
Job polarization is a widely documented phenomenon in developed countries since the 1980s: employment has been shifting from middle to low- and high-income workers, while average wage growth has been slower for middle-income workers than at both extremes. We document 1) that polarization has...
Persistent link: https://www.econbiz.de/10010482521
We analyze the di fferential growth e ffects of basic research, applied research, and embodied human capital accumulation in an R&D-based growth model with endogenous fertility and endogenous education. In line with the empirical evidence, our model allows for i) a negative association between...
Persistent link: https://www.econbiz.de/10010485995
The determinants of the direction of technical change and the implications for economic growth are studied in the one-sector neoclassical growth model of Ramsey (1928), Cass (1965), and Koopmans (1965) extended to allow for endogenous capital- and labor-augmenting technical change. For this...
Persistent link: https://www.econbiz.de/10010490615