International Journal of Business and Economics Volume 3, No. 1 April, 2004 |
Macrodynamic and Financial Effects of a Large-Scale Technology Change |
Natalia Gershun |
Department of Finance and Economics, Pace University, U.S.A. |
Abstract |
We examine the implications of technological change which results in large-scale capital depreciation for the macrodynamic and financial properties of a dynamic general equilibrium model. In an economy where investors fear a capital-devaluing change in technology, the introduction of the possibility of such an event helps to resolve the equity premium and risk-free rate puzzles. |
Keywords: general equilibrium, asset pricing, technology shocks. |
JEL Classifications:E23, E32, G12. |
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