How does risk affect saving? Empirical work typically examines the effects of detectible differences in risk within the … data. How these differences affect saving in theoretical models depends on the metric one uses for risk. For labor …-income risk, second-degree increases in risk require prudence to induce increased saving demand. However, prudence is not …

The argument that policy risk, i.e., uncertainty about monetary and fiscal policy, has been holding back the economic … recovery in the U.S. during the Great Recession has a large popular appeal. We analyze the role of policy risk in explaining … business cycle fluctuations by using an estimated New Keynesian model featuring policy risk as well as uncertainty about …

theory of optimum currency areas. We show that the asymmetric shock of the German unification can be seen not only as the … financial risk, but would also impose austerity on the rest of Europe. The resulting new wave of crisis could trigger a new …