potentially loss averse around their expected outcome make risky investments in education and we draw on optimal tax theory to … explore the design of policy. The model highlights the critical roles played by (i) the relationship between behavioural risk … preferences, standard risk aversion and labour supply behaviour, (ii) the risk properties of education, and (iii) the degree of …

euro area covering the real economy, monetary policy and measures of ex ante and ex post systemic risk representing … take a risk management perspective, One exercise considers the intertemporal financial stability trade-off in the context …

ex ante identical households and the no-risk case with heterogeneous abilities come out as special cases. -- optimal … income ; taxation ; wage risk …

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 …

which individuals face educational risk and wage dispersion across two types of skills. Successful graduation and working as … a skilled worker depends on individual effort in education and on public resources, but educational risk still causes … implemented. -- human capital investment ; endogenous risk ; learning effort ; optimal taxation ; public education …

In a model with ex-ante homogenous households, earnings risk and a general earnings function, we derive the optimal … (overinvestment) in education due to risk. Education policy unambiguously allows for more social insurance if education is a risky … activity. However, if education hedges against labor market risk, optimal tax rates could be lower than without education …