This paper studies Pareto-optimal risk-sharing arrangements in a private information economy with aggregate uncertainty … result can be extended to dynamic settings in the sense that, in this case, only savings need to be distorted, but not trades …

equilibrium risk sharing, the precautionary savings motive in the aggregate can vastly exceed that of even the most prudent actual … reasonable risk aversions for all agents. One downside of a large aggregate savings motive is that savings rates become extremely …Movements in asset prices are a major risk confronting individuals. This paper establishes new asset pricing results …