; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "Intermediated Quantities and Returns"; ; "batchuser@example.com"; "Prescott, Edward C.", "Piguillem, Facundo", "Mehra, Rajnish"; "Federal Reserve Bank of Minneapolis"; "Retirement", "Aggregate intermediation", "Government debt", "Equity premium", "Borrowing", "Life cycle savings", "Lending"; "D31 - Personal Income, Wealth, and Their Distributions", "G23 - Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors", "E44 - Financial Markets and the Macroeconomy", "H62 - National Deficit; Surplus", "H00 - Public Economics: General", "E21 - Macroeconomics: Consumption; Saving; Wealth", "G11 - Portfolio Choice; Investment Decisions", "G12 - Asset Pricing; Trading Volume; Bond Interest Rates", "E20 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data)", "G10 - General Financial Markets: General (includes Measurement and Data)"; "There is a large amount of intermediated borrowing and lending between households. Some of it is intergenerational, but most is between older households. The average difference in borrowing and lending rates is over 2 percent. In this paper, we develop a model economy that displays these facts and matches not only the returns on assets but also their quantities. The heterogeneity giving rise to borrowing and lending and differences in equity holdings depends on differences in the strength of the bequest motive. In equilibrium, the lenders are annuity holders and the borrowers are those who have equity holdings, who live off its income when retired, and who leave a bequest. The borrowing rate and return on equity are the same in the absence of aggregate uncertainty. The divergence between borrowing and lending rates can thus give rise to an equity premium, even in a world without aggregate uncertainty."^^; "2007-09-01"; "2019-06-24T19:34:41.249906409+00:00"^^; "https://doi.org/10.21034/wp.655"; ; "Working Paper 685", "Staff Report 405"; "https://creativecommons.org/licenses/by-nc/4.0/"; "Wed Oct 23 18:04:53 2019"; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "611", "512", "628"; "Working paper (Federal Reserve Bank of Minneapolis. Research Department)"; "655"; "Lending", "Life cycle savings", "Government debt", "Equity premium", "Aggregate intermediation", "Borrowing", "Retirement"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Research Department"; "This paper was replaced by [Staff Report 405](https://doi.org/10.21034/sr.405 \"Staff Report 405\") and subsequently published as [Working Paper 685](https://doi.org/10.21034/wp.685 \"Working Paper 685\") under the title _Costly Financial Intermediation in Neoclassical Growth Theory_."^^, "Published in _Quantitative Economics_ (Vol. 2, No. 1, March 2011, pp. 1-36), https://doi.org/10.3982/QE40."^^, "[Additional files and appendix](https://researchdatabase.minneapolisfed.org/downloads/v118rd568 \"Additional files and appendix\")"^^; ; "Publication" . ; .