TY  - JOUR
AU  - Mehra,Rajnish
AU  - Prescott,Edward C.
TI  - The Equity Premium in Retrospect
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9525
PY  - 2003
Y2  - March 2003
UR  - http://www.nber.org/papers/w9525
L1  - http://www.nber.org/papers/w9525.pdf
N1  - Author contact info:
Rajnish Mehra
Department of Economics
W. P. Carey School of Business
Arizona State University
PO Box 879801
Tempe, AZ  85287-9801
Tel: 480 965-6335
Fax: 480 965-0748
E-Mail: rajnish.mehra@asu.edu

Edward C. Prescott
Arizona State University
Economics Department
P. O. Box 879801
Tempe, AZ 85287-9801
E-Mail: edward.prescott@asu.edu
AB  - This article takes a critical look at the literature on equity premium puzzle - the inability of standard intertemporal economic models to rationalize the statistics that have characterized U.S. financial markets over the past century. A summary of historical returns for the United States and other industrialized countries and an overview of the economic construct itself are provided. The intuition behind the discrepancy between model prediction and empirical data is explained and the research efforts to enhance the model's ability to replicate the empirical data are summarized.
ER  -