Adil Ahmad Mughal2025-07-312025-07-312023-05https://escholar.umt.edu.pk/handle/123456789/4228This thesis takes a fixed-point method of construction for idiosyncratic risk in the US financial market, S&P-500 in particular, for a financial macroeconomic general equilibrium result with the help of a very basic yet innovative DSGE modeling. Instead of a linear and complete financial market equilibrium in isolation this approach allows for a nonlinear general equilibrium in an explicit financial market bent. The fixed-point, alongside another, measure of idiosyncratic risk used for the very first time through this thesis for a combined financial macroeconomic equilibrium is found to be especially very useful for empirically modeling inflation as compared to the output gap.en-USThesis