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In contrast to Robert Mundell‘s Optimum Currency Area theory and his recommendation of forming monetary union, the economic fundamentals of Euro area member countries have not harmonized. The opposite holds: the Euro core countries – most of all Germany, but also the Netherlands and Finland...
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We generalize the long-run risks (LRR) model in Bansal and Yaron (2004) by incorporating the recursive smooth ambiguity aversion preferences of Klibanoff, Marinacci, and Mukerji (2005, 2009) and time-varying ambiguity. Relative to the Bansal-Yaron model, the generalized LRR model remains...
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sources. Risk is a pervasive feature of law and public policy. Decision-making in these domains often takes place in the … employs the basic tools of decision theory (probability and utility) to measure the likelihood as well as the costs and … of risk that has been systematically ignored. We call it “super-risk.” Super-risk occurs when, at the time of decision …
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