uninsured capital income risk, and suffer from an information-processing capacity constraint. For given attention devoted to … capital income risk, we solve for the optimal consumption-saving choices and show that the expected welfare is increasing with … households would pay more attention to capital income risk if they have (i) lower initial wealth endowment, (ii) lower marginal …

search model with (i) precautionary savings, (ii) work opportunities in paid- and self-employment, (iii) skill heterogeneity …

data. How these differences affect saving in theoretical models depends on the metric one uses for risk. For labor-income …How does risk affect saving? Empirical work typically examines the effects of detectible differences in risk within the … risk, second-degree increases in risk require prudence to induce increased saving demand. However, prudence is not …

(2005). We extend it by unemployment risk using Markov chains to model the transition between different employment states … systems as those established in the EU are able to offset the negative impact of unemployment risk on the portfolio …

Households can rely on private savings or on public unemployment insurance to hedge against the risk of becoming … risk on households' equity holdings. When incorporating long-term unemployment, the US-equity share drops. This negative … significantly alter portfolio decisions. We show that different responses of portfolios to unemployment risk can be attributed to …

regime. Based on this analysis, the paper provides a theory of the joint determination of real and financial development. The …

We show how optimal saving in a two-period model is affected when prudence and risk aversion of the underlying utility … function change. Increasing prudence alone will induce higher savings only if, for certain combinations of the interest rate … and the pure time discount rate, there is distributional neutrality between the two periods. Otherwise, changes of risk …

proposition that aggregate consumption growth equals aggregate income growth in a small open economy populated by buffer stock …

alternative measures of income uncertainty in a cross-section of households. In addition to the usual controls, risk aversion is …The saving ratio of households in Germany has increased in the past few years when the income trend was weak. This … could be due to precautionary saving. In this paper, the importance of precautionary saving against income uncertainty is …