I introduce money into an incomplete markets model with heterogeneous agents and uninsurable income risk. I show that … the model exhibits both non-monetary and monetary equilibria, with the latter existing when income risk is sufficiently …

The theoretical literature on generational risk assumes that this risk is large and that the government can effectively …We find that intrinsic generational risk is quite small, that government policies can produce generational risk, and … that bond markets can help share generational risk. We also show that a bond market can mitigate risk-inducing government …

capital of older workers. Due to the lack of inter-generational risk sharing, innovation creates a systematic risk factor …, which we call "displacement risk.'' This risk helps explain several empirical patterns, including the existence of the … growth-value factor in returns, the value premium, and the high equity premium. We assess the magnitude of displacement risk …

-generational transmission of wealth. Financial markets are incomplete, exposing agents to both labor income and capital income risk. We show … that the stationary wealth distribution is a Pareto distribution in the right tail and that it is capital income risk …

optimally shares risks across generations exposes future generations to a share of the risk in physical capital returns. Such a … system reduces precautionary saving and increases the risk-bearing capacity of the economy. Under plausible conditions it … increases the riskless interest rate, lowers the price of physical capital, and reduces the risk premium on physical capital …

This paper examines the optimal allocation of risk in an overlapping-generations economy. It compares the allocation of … risk the economy reaches naturally to the allocation that would be reached if generations behind a Rawlsian 'veil of … ignorance' could share risk with one another through complete Arrow-Debreu contingent-claims markets. The paper then examines …

Are market and voting institutions capable of producing optimal intergenerational risk-sharing? To study this question … that take place in markets and voting institutions. Unlike most of that literature, we study both ex-ante and interim risk …-sharing. Our main conclusion is that both types of institutions have serious problems. Markets cannot generate ex-ante risk …