The Spirit of Capitalism and Asset Pricing: An Empirical Investigation

Qiang Zhang ()

The B.E. Journal of Macroeconomics, 2006, vol. 6, issue 3, 25

Abstract: We extend and test two models of asset pricing that feature status-seeking through accumulation of not only financial and real assets but also human capital. We use weak-identification robust tests to confront these models with U.S. aggregate data. Contrary to previous results, we find that the spirit of capitalism hypothesis, modeled as either direct preference for wealth or pursuit of relative wealth status, is rejected. Therefore, adding status motive alone to an otherwise standard model may not be sufficient to resolve the equity premium puzzle.

Keywords: spirit of capitalism; asset pricing; equity premium; human capital; GMM; weak-identification robust tests (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (6)

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DOI: 10.2202/1534-5998.1418

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