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Using an economic model to assess welfare risk and resilience to disasters, this paper systematically tackles the … losses at the microeconomic level. Apart from the prioritization of regions based on resilience and welfare risk, we identify … risk from riverine floods. While there are similarities in the ranking of policies among regions with comparable levels of …
Persistent link: https://www.econbiz.de/10011810138
-probability extreme events on environmental policy in a continuous-time real options model with "tail risk". In a nutshell, our results … indicate the importance of tail risk and call for foresighted pre-emptive climate policies. -- climate policy ; extreme events …
Persistent link: https://www.econbiz.de/10003994530
Recent theoretical work in the economics of climate change has suggested that climate policy is highly sensitive to "fat-tailed" risks of catastrophic outcomes (Weitzman, 2009b). Such risks are suggested to be an inevitable consequence of scientific uncertainty about the effects of increased...
Persistent link: https://www.econbiz.de/10010199723
If the threshold that triggers climate catastrophe is known with certainty, and the benefits of avoiding catastrophe are high relative to the costs, treaties can easily coordinate countries' behavior so as to avoid the threshold. Where the net benefits of avoiding catastrophe are lower, treaties...
Persistent link: https://www.econbiz.de/10009684058
People often fail to insure against catastrophes, even when insurance is subsidized. Even when insuring homes, many homeowners still underinsure the full value of their assets. Some researchers have suggested using long-term insurance contracts to reduce these insurance gaps. We examine...
Persistent link: https://www.econbiz.de/10012694052
. Uncertainty about the future rate of growth of the economy and emissions and the risk of macroeconomic disasters (tail risks) also …
Persistent link: https://www.econbiz.de/10012249287
long-run analysis, we employ local projections to capture the short-term dynamics following disaster-related mortality … disaster shocks, whereas external sustainability responses are more muted and heterogeneous. Together, these findings highlight … macroeconomic channels and to inform adaptive, risk-sensitive fiscal policy frameworks. …
Persistent link: https://www.econbiz.de/10015372018
We investigate the trade-off between the risk-sharing gains enjoyed by more interconnected firms and the costs … resulting from an increased risk exposure. We find that when the shock distribution displays "fat" tails, extreme segmentation …
Persistent link: https://www.econbiz.de/10010260030
Jesús Fernández-Villaverde, Pablo A. Guerrón-Quintana, Juan F. Rubio-Ramírez and Martín Uribe (2011) find that risk … rate risk shock increases by 63 percent and the contribution of interest rate risk shocks to business cycle volatility more … than doubles. Hence, risk matters more in the recalibrated model. However, the recalibrated model does worse in capturing …
Persistent link: https://www.econbiz.de/10010354846
of optimal risk-sharing in mortgage contracts. But since only a small literature has studied this question, more research … termination via prepayment or default affects optimal risk-sharing. The broad conclusion of the analysis is that potential … mortgage termination makes higher risk exposure for borrowers optimal. …
Persistent link: https://www.econbiz.de/10010412302