We study the optimal taxation of risk-free and excess capital income with heterogeneous rates of return, alongside an … optimal nonlinear earnings tax. Households can hold three assets: one risk-free, one risky but diversifiable, and one a … private investment with idiosyncratic risk whose expected return differs among households. Contrary to expectations, the …

We develop a novel argument why better public information can help countries to insure against idiosyncratic risk … and engage in risk-sharing contracts with limited enforceability. Better public information has two opposite effects …. First, it has a detrimental effect on risk sharing by limiting risk-sharing possibilities as emphasized by Hirshleifer (1971 …

above the expected growth rate of the economy and when thegovernment has a lifetime perspective of the risk exposure. The …

differences in risk premia. We deduct testable hypotheses on the basis of which we empirically analyze the impact of uncertainty …