political uncertainty is priced in the equity option market as predicted by theory. Options whose lives span political events …We empirically analyze the pricing of political uncertainty, guided by a theoretical model of government policy choice …. To isolate political uncertainty, we exploit its variation around national elections and global summits. We find that …

technological revolutions, the nature of this uncertainty changes from idiosyncratic to systematic. The resulting quot … characterized by high uncertainty and fast adoption. We find empirical support for the model's predictions in 1830-1861 and 1992 …

Our simple model features agents heterogeneous in skill and risk aversion, incomplete financial markets, and … redistributive taxation. In equilibrium, agents become entrepreneurs if their skill is sufficiently high or risk aversion … sufficiently low. Under heavier taxation, entrepreneurs are more skilled and less risk-averse, on average. Through these selection …

We analyze how changes in government policy affect stock prices. Our general equilibrium model features uncertainty … average. The price fall is expected to be large if uncertainty about government policy is large, as well as if the policy … change is preceded by a short or shallow downturn. Policy changes increase volatility, risk premia, and correlations among …