⁹Note that since $Pt$ and $dt$ and $γ$ and $σ2d$ are measurable, the formula deﬁnes a relationship between $ρ$ and $𝜗$ . If we follow Mehra and Prescott [1985] in assuming that the time preference rate $𝜗$ matches the riskfree interest rate at about 0.01, it is possible to calculate $ρ$ as the value that causes this equation to ﬁt the data.