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.


Published in:
American Economic Review, 92, 2, 135-140
Year:
2002
Publisher:
American Economic Association
ISSN:
0002-8282
Note:
JEL E32, D91, D52
Laboratories:




 Record created 2007-07-16, last modified 2018-03-17


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