highly sensitive to uncertainty. We briefly summarize the theory, stressing its empirical implications. We then use cross …-section and time-series data for a set of developing and industrialized countries to explore the relevance of the theory for … - affects investment as the theory suggests, but the size of the effect is moderate, and is greatest for developing countries …

itself. It then examines whether aggregate market risk or aggregate fundamental risk is priced. Although market risk is … priced, the paper does find that fundamental risk is an important factor in explaining risk premia …

an additional hedging motif driven by the interaction between real exchange rate risk and ambiguity aversion. What … matters is the long-run as opposed to the short-run risk. Domestic equity is a good hedge with respect to long-run real … exchange rate risk even when bonds are traded. The higher is the degree of ambiguity aversion, the stronger is the home bias …

adult life span is about 15 years in the U.S., and theory and evidence suggest it is costly. I calibrate a utility …

assumptions: Economic risk is high relative to political risk, markets are sufficiently incomplete, and there exists a rent …