NBER Publications by Lars Ljungqvist
Working Papers and Chapters
| March 2009 | Optimal Endowment Destruction under Campbell-Cochrane Habit Formation
with Harald Uhlig: w14772
Campbell and Cochrane (1999) formulate a model that successfully explains a wide variety of asset pricing puzzles, by augmenting the standard power utility function with a time-varying subsistence level, or "external habit", that adapts nonlinearly to current and past average consumption in the economy. This paper demonstrates, that this comes at the "price" of several unusual implications. For example, we calculate that a society of agents with the preferences and endowment process of Campbell and Cochrane (1999) would experience a welfare gain equivalent to a permanent increase of nearly 16% in consumption, if the government enforced one month of fasting per year, reducing consumption by 10 percent then. We examine and explain these features of the preferences in detail. We numerically... |
| January 1997 | Taxes and Subsidies in Swedish Unemployment
with Thomas J. Sargent
in The Welfare State in Transition: Reforming the Swedish Model, Richard B. Freeman, Robert Topel, and Birgitta Swedenborg, editors
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| n/a | How Sweden’s Unemployment Became More Like Europe’s
with Thomas J. Sargent
in Reforming the Welfare State: Recovery and Beyond in Sweden, Richard B. Freeman, Birgitta Swedenborg and Robert Topel, editors
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