We provide benchmarks to evaluate what is an optimal foreign debt and a maximal foreign debt (debt-max), when risk is explicitly considered. When the actual debt exceeds debt-max, then the economy will default when a bad shock occurs. This paper is an application of the stochastic optimal...

We argue that since there are several impediments to international risk sharing, the welfare gains from full international risk sharing, which have been the object of analysis in the previous literature, are not suggestive. Instead, we study the gains from feasible risk sharing and find that...

One of the main reasons to include pay-as-you-go (PAYG) schemes in multi-pillared pension systems is that they may entail beneficial risk-sharing and diversification features However, depending on the pension formula these features vary significantly for different types of PAYG schemes. We...

This paper examines the relationship between idiosyncratic risk in labour income and fluctuations in aggregate labour market quantities for Great Britain. We use data from the British Household Panel Survey (BHPS) for 1991-2008 and from the BHPS sub-sample of Understanding Society for 2010-2014....

We propose a new instrument to identify uncertainty shocks in a SVAR model with external instruments. The instrument is constructed by exploiting variations in the price of gold around events that capture periods of changes in uncertainty. The variations in the price of gold around the events...

When countries need to implement costly economic policy reforms, these often imply uncertainties about their effectiveness for the home country and their spillovers to other countries. We develop a model to show that under these circumstances countries implement too few or too many policy...

This paper incorporates publication uncertainty in a game between researchers and journal editors and examines its effects on quantity and quality of published research. A stylized differential Stackelberg game between journal editors and academic authors is considered, where authors seek to...

Using high-resolution data from Africa over the period 1998-2012, this paper investigates the hypothesis that a higher exposure to malaria increases the incidence of civil violence. The analysis uses panel data at the 1o grid cell level at monthly frequency. The econometric identification...

Reliable early warning signals are essential for timely implementation of macroeconomic and macro-prudential policies. This paper presents an early warning system as a set of multi-period forecasts of indicators of tail real and financial (systemic) risks. Forecasts are obtained from: (a)...

We analyze a psychologically-based model of voter turnout in an election with common value and uncertainty. Our model yields distinctive comparative statics results. First, an increase in the proportion of informed citizens may cause the winning margin for the right candidate to either rise or...