Solving the equity risk premium puzzle and inching toward a theory of everything

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

3 Scopus Citations
View graph of relations

Author(s)

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)45-63
Journal / PublicationJournal of Private Equity
Volume21
Issue number2
Online published26 Feb 2018
Publication statusPublished - 1 Mar 2018

Abstract

The crux of the equity premium puzzle is that the return on equities has far exceeded the average return on short-term, risk-free debt and cannot be explained by conventional representative-agent, consumption-based equilibrium models. The author reviews several attempts undertaken over the years to explain this anomaly and explores whether a fusion of the approaches supplemented with better methods to handle various reservations would provide a more realistic and yet tractable framework to tackle the various conundrums in the social sciences. The rationale for a unified theory is that beauty can emerge from chaos and many long-standing puzzles seem to have been resolved using different techniques.

Bibliographic Note

Full text of this publication does not contain sufficient affiliation information. With consent from the author(s) concerned, the Research Unit(s) information for this record is based on the existing academic department affiliation of the author(s).