Equity Premium RBC Model with EZ Preferences

General DSGE Modeling
1

(Hello,

I’ve built a simple RBC model with Epstein-Zin preferences and capital adjustment costs. I’m wondering why I do not observe an Equity Premium under fully fixed labor supply and substantial risk-aversion as well as significant capital adjusment costs… :thinking:

Thank you for your comments :four_leaf_clover:)

Please delete this post, I made a mistake in the code. Indeed, the model produces a substantial EP.

2

I am glad you solved the problem. We usually keep all posts as a future reference point.