Direct preferences for wealth, the risk premium puzzle, growth, and policy effectiveness

Liutang Gong and Heng-Fu Zou ()

No 53, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: In this paper, we consider social status, the spirit of capitalism, fiscal policies, and asset pricing in a stochastic model of growth. With specific assumptions on the production technology, preferences, and stochastic shocks, we derive the explicit solutions to the growth rates of consumption and savings and equilibrium returns on all assets. We further demonstrate how fiscal policies, the spirit of capitalism, and stochastic shocks affect growth, asset pricing, and welfare.

Keywords: Social status; The spirit of capitalism; Fiscal policies; Asset pricing; Stochastic growth (search for similar items in EconPapers)
JEL-codes: E0 G1 H0 O0 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (10)

Published in Journal of Economic Dynamics and Control, Volume 26, Issue 2, February 2002, Pages 247-270

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Journal Article: Direct preferences for wealth, the risk premium puzzle, growth, and policy effectiveness (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:53

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