research article
Excess Asset Returns and Limited Enforcement
This paper investigates the effect of limited enforcement of contracts on asset returns in a three-period pure- exchange overlapping generations economy. We consider a life-cycle setting with a safe and a risky asset and find that lack of commitment can significantly affect the rate of returns of these assets and possibly generate large equity premia.
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Excess_Asset_Returns_with_limited_LL_final_PostPrint.pdf
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348.6 KB
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