University of Southern California

FBE to Host Visit by Dr. Edward Prescott on 11/7
2004 Economics Nobel Laureate's Presentation Open to Marshall Attendees
November 1, 2008 • by News at Marshall

Dr. Prescott will be presenting his paper, "Intermediated Quantities and Returns," co-authored with Rajnish Mehra and Facundo Piguillem. The presentation will be in JKP 202 from 3:30 pm to 5:00 pm, and is open to all USC Marshall faculty, students, staff, and alumni.

Dr. Prescott's presentation is part of FBE's Macroeconomics & International Finance Workshop seminar.
Click here for workshop schedule

Below is an abstract of that paper.

The difference between average borrowing and lending rates in the United States is over 2 percent. In spite of this large difference, there is over 1.7 times GNP in 2007 of intermediated borrowing and lending between households. In this paper a model is developed consistent with these facts. The only difference within an age cohort is preferences for bequests. Individuals with little or no bequest motive are lenders, while individuals with strong bequest motive are borrowers and owners of productive capital. Given no aggregate uncertainty, the return on equity is the same as the household borrowing rate.

The government can borrow at the household lending rate, so there is a 2 percent equity premium in our world with no aggregate uncertainty. We examine the distribution and life cycle patterns of asset holding and consumption and find there is large dispersion in asset holdings and little in consumption.

Dr. Prescott's paper:
Click here for paper

Dr. Prescott's biography:
Click here for biography

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assistant professor of management and organization at USC Marshall. "Bullish on Uncertainty: How Organizational Cultures Transform Participants" is forthcoming from Cambridge University Press. The book was co-authored by Stanton Wortham, of the School of Education at the University of Pennsylvania based on Michel's dataset.

For more information on the book click here.

About the USC Marshall School of Business
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