Does Intrinsic Habit Formation Actually Resolve the Equity Premium Puzzle?

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David A. Chapman;
  • Journal: Review of Economic Dynamics, volume 5, issue 3 July, pages 618-645
  • Related identifiers: doi: 10.1006/redy.2001.0155
  • Subject:
    • jel: jel:E21 | jel:G12

Constantinides (1990) describes a simple model of intrinsic habit formation that appears to resolve the "equity premium puzzle" of Mehra and Prescott (1985). This finding is particularly important, since it has motivated a broader consideration of the implications of ha... View more
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