Consider an economy at t = 0 and t = T. Show that under CARA-utility, the stochastic
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Consider an economy at t = 0 and t = T. Show that under CARA-utility, the stochastic discount factor is
if the usual time separable von Neumann-Morgenstern-utility functional is assumed.
Transcribed Image Text:
MT=ePT-a(Cr-c»)
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The stochastic discount factor for a CARAutility function is given by the following equati...View the full answer
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