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Supply Based Explanation Of The Equity Premium Puzzle, Richard H. Serlin
Supply Based Explanation Of The Equity Premium Puzzle, Richard H. Serlin
Richard H. Serlin
All of the explanations for the equity premium puzzle I have seen in the literature are based on the demand side; trying to find utility functions for a representative investor and ex-ante probability distributions for returns that would explain investors demanding such high average returns for stocks relative to bonds. I suggest a supply side explanation: The long run supply curve for corporate stock may simply be extremely long and flat, and consistently about 5 ½ percentage points in return higher than the premium bonds supply curve, even at stock quantities as high as the entire national savings rate. Why? …
Household Financial Ratios: A Review Of Literature, Nathan Harness, Michael Finke, Swarn Chatterjee
Household Financial Ratios: A Review Of Literature, Nathan Harness, Michael Finke, Swarn Chatterjee
Swarn Chatterjee
The literature on household financial ratios provides insight into the characteristics related to meeting common investment asset, debt, and liquidity guidelines. We know much about the contemporaneous relation between ratios and household characteristics, but the literature exploring the impact of meeting ratio thresholds on subsequent financial success is in its infancy. Ratios can be useful heuristics that efficiently provide information about financial status as well as a prescriptive guideline to motivate more efficient financial behavior. While the existing literature provides some insight into which households have adequate ratios, there are opportunities for additional empirical scrutiny and application of household resource …