... models of the yield curve. Many of these mod-els are arbitrage-free latent factor models. Unfortunately, there are many technical difficultiesinvolved with the estimation of AF latent factor models, ... Economics Discussion Series, No. 48,Board of Governors of the Federal Reserve System.291 IntroductionThe evolution of economic ideas and models has often been altered by economic events. TheGreat ... Journal of Monetary Economics, Vol. 12, 383–398.Campbell, John and John Cochrane, 1999, “By Force of Habit: A Consumption-BasedExplanation of Aggregate Stock Market Behavior,” Journal of Political...