Macroeconomic Dynamics, vol.16, no.SUPPL. 1, pp.139-148, 2012 (SSCI)
In this paper we use a simple model with a single Cobb-Douglas firm and a consumer with a CRRA utility function to show the difference between the equity premia in the production-based Brock model and the consumption-based Lucas model. With this simple example we show that the equity premium in the production-based model exceeds that of the consumption-based model with probability 1. © 2012 Cambridge University Press .