"... In PAGE 14: ...nflation-linked bonds is higher (0.18 versus 0.23). Table2 reports the risk premia on both nominal and real bonds, as well as their volatilities and the inflation risk premium when the factors equal their unconditional expectation. We define the inflation risk premium as the difference in expected returns on a nominal and inflation-indexed bond with the same maturity, consistent with Campbell and Viceira (2001).... ..."

"... In PAGE 33: ... Illustrative Examples of the Effect of School Catchment Areas on Prices It is interesting to calculate the implied effects of the point estimates of the premia reported in the previous section for the two popular schools in terms of the scale of the differences in house prices. These are shown in Table9 for the relevant locations. The premium for the Coundon Court catchment area was estimated at 20 percent and that for Finham Park at 16 percent.... ..."

"... In PAGE 36: ... Illustrative Examples of the Effect of School Catchment Areas on Prices It is interesting to calculate the implied effects of the point estimates of the premia reported in the previous section for the two popular schools in terms of the scale of increases in house prices. These are shown in Table10 for the relevant locations. The premium for the Coundon Court catchment area was estimated at 19 percent and that for Finham Park at 15 percent.... ..."

"... In PAGE 34: ... Finally, the Q statistics do not reveal any symptoms of autocorrelation. Table6 turns to estimation of the determinants of the NDF term premium, measured by the difference between the 12-month and 1-month premia. In addition to the explanatory variables in the preceding table, we introduce also the term premium of U.... ..."

"... In PAGE 34: ... Finally, the Q statistics do not reveal any symptoms of autocorrelation. Table6 turns to estimation of the determinants of the NDF term premium, measured by the difference between the 12-month and 1-month premia. In addition to the explanatory variables in the preceding table, we introduce also the term premium of U.... ..."

"... In PAGE 15: ... Third, we find that nominal bond risk premia are much more sensitive to changes in expected inflation than to changes in the real rate, which is caused by the high persistence of expected inflation discussed earlier. Panel A of Table3 presents the correlations between the assets that are possibly included in the asset menu, while Panel B of Table 3 reports the correlation between the risk premia on 5-year and 10-year nominal bonds and the same asset returns. These correlations are important as they drive the hedging demands held by the investor to hedge against future changes in investment opportunities.... In PAGE 15: ... Third, we find that nominal bond risk premia are much more sensitive to changes in expected inflation than to changes in the real rate, which is caused by the high persistence of expected inflation discussed earlier. Panel A of Table 3 presents the correlations between the assets that are possibly included in the asset menu, while Panel B of Table3 reports the correlation between the risk premia on 5-year and 10-year nominal bonds and the same asset returns. These correlations are important as they drive the hedging demands held by the investor to hedge against future changes in investment opportunities.... In PAGE 22: ... The optimal hedging demands turn out to be long in 5-year nominal bonds and are financed by reducing the allocation to stocks and, in particular, cash. Long-term bond returns are negatively correlated with future bond risk premia ( Table3 , Panel B) so that a long position in bonds position pays off exactly in those states of the economy where bond risk premia are low. However, the hedging demands are strikingly small.... ..."

"... In PAGE 41: ... Notice that, unlike in the Lucas model, the signs of the term premia and average term spread are una ected by the sign of rst-order autocorrelation of consumption growth. Table14 presents how sensitive the main results are to the estimated value of the standard deviation of consumption growth. Again, preference parameters are recalibrated to match average risk-free and its standard deviation.... ..."

"... In PAGE 30: ...4 Change all wage premia Once we have assessed the individual e ect of each of the changes in relative wages we consider what happens to the model economy when we increase wage-premia within sexes and decrease wage-premia between sexes simultaneously. Table6 reports the results. We change relative wages within and between sexes also matching the ratios between average wages of top males and females, and of bottom males and females that in the data drop respectively from 1.... ..."