Ambiguity, ambiguity aversion and stores of value: The case of Argentina

We study the household portfolio allocation in an economy with a history of nominal anchor volatility. Applying smooth ambiguity preferences to a static portfolio choice problem, we rationalize two facts about the Argentine experience of the last 20 years: the dollarization of household financial assets and its bias towards investment real estate as a means of preserving the real value of wealth. We find that ambiguity explains portfolio dollarization. In addition, ambiguity aversion reduces the demand for assets denominated in US dollars and increases the demand for investment real estate.

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Year of publication:	2014
Authors:	Corso, Eduardo Ariel
Published in:	Cogent Economics & Finance. - Abingdon : Taylor & Francis, ISSN 2332-2039. - Vol. 2.2014, 1, p. 2-12
Publisher:	Abingdon : Taylor & Francis
Subject:	ambiguity \| ambiguity aversion \| Argentina \| dollarization \| investment real estate \| stores of value

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Type of publication:	Article
Type of publication (narrower categories):	Article
Language:	English
Other identifiers:	10.1080/23322039.2014.947001 [DOI] 820138320 [GVK] hdl:10419/147731 [Handle] RePEc:taf:oaefxx:DOI:10.1080/23322039.2014.947001 [RePEc]
Classification:	G10 - General Financial Markets. General ; G11 - Portfolio Choice ; D1 - Household Behavior and Family Economics
Source:	EconStor

Persistent link: https://www.econbiz.de/10011559136