We analyze the treatment and impact of idiosyncratic or firm-specific risk in regulation. Regulatory authorities … regularly ignore firm-specific characteristics, such as size or asset ages, implying different risk exposure in incentive … all firms. This will lead to implicit discrimination. We combine models of firm-specific risk, liquidity management and …

facing uninsurable idiosyncratic labor income risk. The Ramsey government internalizes the general equilibrium feedback of … optimal aggregate saving rate is independent of income risk. The optimal time-invariant tax on capital is increasing in income … risk. Its sign depends on the extent of risk and on the Pareto weight of future generations. If the Ramsey tax rate that …

productivity and aggregate business cycle risk. We show analytically that the whole welfare benefit from joint insurance against … both risks is greater than the sum of benefits from insurance against the isolated risk components. One reason is the … convexity of the welfare gain in total risk. The other reason is a direct risk interaction which amplifies the utility losses …