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| Volume 3, No. 1,
April 2004
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Macrodynamic and
Financial Effects of a Large-Scale Technology Change |
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| Natalia
Gershun |
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Department of Finance and Economics,
Pace University, U.S.A. |
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| Abstract |
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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. |
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Key words:
general
equilibrium; asset pricing; technology shocks |
| JEL
classification:
E23; E32;
G12 |
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