It’s an important task, but it seems that it is no longer being pursued with the same sense of urgency. That is why, today, I want to take this opportunity to highlight areas where we need to continue to push forward and put EMU on a more sustainable footing.
That earlier decade, like the present, was a time of low interest rates and low inflation, and the corporate bond risk premium was low, just as it is today. But our estimates suggest that the equity premium for that period was substantially higher than it appears to be today.