; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "Intermediated Quantities and Returns"; ; "batchuser@example.com"; "Prescott, Edward C.", "Piguillem, Facundo", "Mehra, Rajnish"; "Federal Reserve Bank of Minneapolis"; "Asset returns", "General equilibrium", "Life cycle", "Bequests", "Assets quantities"; "E44 - Financial Markets and the Macroeconomy", "G10 - General Financial Markets: General (includes Measurement and Data)", "E20 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data)"; """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. This paper was subsequently published as [Working Paper 685](https://doi.org/10.21034/wp.685) under the title \"Costly Financial Intermediation in Neoclassical Growth Theory.\""""^^; "2008-09-01"; "2019-06-04T17:35:43.637969309+00:00"^^; "https://doi.org/10.21034/sr.405"; ; "https://creativecommons.org/licenses/by-nc/4.0/"; "2020-06-04T17:34:21.835754825+00:00"^^; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "611", "512", "628"; "Staff report (Federal Reserve Bank of Minneapolis. Research Department)"; "405"; "Life cycle", "Assets quantities", "Bequests", "Asset returns", "General equilibrium"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Research Department"; "[Additional Files and Appendix](https://researchdatabase.minneapolisfed.org/downloads/v118rd568?locale=en)"^^; ; "Publication" . ; .