AER Equity Risk Premium vs Debt Risk Premium chart

The Consumer Reference Group requested that we back-cast Figure 6 from page 55 of our Draft Guideline explanatory statement. This is a comparison of the equity risk premium (ERP) to the debt risk premium (DRP) through time. We have done this. In doing this we have updated it for revised RBA data and continued it to the end of August 2018. We have also added an extra line on the chart approximately reflecting the DRP through time calculated using our 2018 draft guideline debt approach. The notes under the chart provide further explanation.