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 …

build a two-region RBC model with labor market frictions, idiosyncratic consumption risk, and limited cross …-sectional heterogeneity to establish a direct link between labor market reforms and changes in net foreign assets via a precautionary savings …

savings behavior. To this end, we analyze hand-collected historical data on livestock availability during World War II at the … provincial level, alongside detailed survey data on elicited time preferences and household savings. By leveraging differences … scarcity during early childhood develop higher levels of patience later in life and tend to hold more (precautionary) savings …

way to come up with a measure of time-varying disaster risk in the spirit of Wachter (2013). Our findings imply that both … the disaster and the long-run risk paradigm can be extended towards explaining movements in the stock-bond return …

from limited liability and unobservable risk taking, distorts banks’ incentives leading them to choose excessively risky … investments. A monetary policy expansion magnifies these distortions, increasing excessive risk taking and lowering the expected … more inflation volatility in exchange for less volatility in risk taking and output. …

). First, using household survey data from Germany, we show that the consumption risk of short-time work is lower than that of … market frictions. Short-time work weakens workers' precautionary savings motive and lowers labor costs. This reduces the …

Residual income valuation is based on the assumption that the clean surplus relation holds. As pointed out by Ohlson … (2000), among others, the standard clean surplus relation is frequently violated. Moreover, standard residual income …

2001-2012. We estimate dynamic labor supply equations augmented with a measure of wage risk. Our results show that married …. This implies that about 26% of precautionary savings are due to precautionary labor supply. If self-employed faced the same … wage risk as the median civil servant, their hours of work would reduce by 4%. …

We propose and implement a method to identify shocks to transition risk, addressing key challenges regarding its … risk in the United States. These shocks have important aggregate effects, also inducing financial instability. They are …