No-arbitrage models are extremely flexible modelling tools, but often lack economic motivation. This paper describes an equilibrium consumption based CAPM framework based on Epstein-Zin preferences, which produces analytic pricing formulas for stocks and bonds under the assumption that macro growth rates follow affine processes. This allows the construction of equilibrium pricing formulas while...

We prove the stability of equilibrium in a completely decentralized Walrasian general equilibrium economy in which prices are fully controlled by economic agents, with production and trade occurring out of equilibrium. Journal of Economic Literature Classifications: C62—Existence and Stability Conditions of Equilibrium D51—Exchange and Production Economies D58—Computable and Other Applied Gener...

The Atkinson-Stiglitz theorem on uniform consumption taxation breaks down if prices are endogenous. This paper investigates the implications for optimal food subsidies in China. To do so, we build a general equilibrium model where low-skilled workers have comparative advantage production of food. Food raise relative demand workers, which reduces skill premium and indirectly redistributes income...