Risks for the Long Run A Potential Resolution of Asset Pricing Puzzles英.doc

THE JOURNAL OF FINANCE ? VOL. LIX, NO. 4 ? AUGUST 2004 Risks for the Long Run: A Potential Resolution of Asset Pricing Puzzles RAVI BANSAL and AMIR YARON? ABSTRACT We model consumption and dividend growth rates as containing (1) a small long- run predictable component, and (2) fluctuating economic u