We extend the canonical income process with persistent and transitory risk to shock distributions with left …-skewness and excess kurtosis, to which we refer as higher-order risk. We estimate our extended income process by GMM for household … show that in a standard incomplete-markets life-cycle model, first, higher-order risk has sizable welfare implications …

interest rate level is. This impact softens with increasing risk of changes in the present value of banking books. We do not … increase the credit risk of their bond portfolio. After a fall in operational income, banks increase their fee and commission …

2001-2012. We estimate dynamic labor supply equations augmented with a measure of wage risk. Our results show that married … wage risk as the median civil servant, their hours of work would reduce by 4%. …

Using German panel data, we assess the causal effect of job loss, and thus of an extensive income shock, on risk … attitude. In line with predictions of expected utility reasoning about absolute risk aversion, losing oneś job reduces the … perceives the threat of job loss and is of a transitory nature. The change in stated risk attitude matches observable job …