particular, we investigate the extent to which a spillover of risk among hedge funds through redemptions and failures of other … funds has affected the probability of fund failure. We find that risk spill-over is significantly related to the failure … within the same investment style are adversely affected through both channels of risk spillover. In addition, we find that …

technological diversification. Production makes use of different input varieties, which are subject to imperfectly correlated shocks …. In our model, the expansion in the number of varieties provides diversification benefits against variety-specific shocks …

We show that international consumption risk sharing is significantly improved by capital flows, especially portfolio … investment. Concomitantly, we show that poor institutions hamper risk sharing, but to an extent that decreases with openness. In … particular, risk sharing is prevalent even among economies with poor institutions, provided they are open to international …

diversification is less effective when jumps are frequent, unpredictable and strongly correlated. Public supervisors may also mind …

We study how financial market efficiency affects a measure of diversification of output across industrial sectors … and for various levels of disaggregation, we construct a benchmark measure of diversification as the set of allocations of … faster for sectors that have a higher "natural" long-term risk-adjusted growth and which exhibit higher information frictions …

might avoid unintended outcomes by adjusting policy to minimize the risk of exuberance equilibria. JEL Classification: E52 …

: rational expectations and learning. We show that in this environment the ability to stabilize the real side of the economy is … private learning and misperceptions of natural rates call for greater policy inertia, a more aggressive response to inflation … economy. We show that such policies are quite robust to potential misspecification of private sector learning and the …

substantial fashion: better experiences increase the financial risk households are willing to take as well as stock market …

, learning from the experience of the 1970s, eschewed activist policies in favor of policies that concentrated on the achievement …