Autonomous demand shock affects consumption spending. Variation in consumption spending contributes to the volatility in aggregate demand. As the investor is risk averse, volatility of aggregate demand reduces investment. Government injects monetary noise to reduce the volatility in aggregate...

This paper extends the jump-diffusion model to extract the fear component towards rare events from traditional representative agent’s risk aversion. The model implicates that investor’s fear of tail jumps in the financial market impacts equity risk premium. It also provides empirical...

In addition to a myriad of industrial uses, precious metals continue to play an important role in the global financial system; they are increasingly popular as an investment and form part of a well-diversified portfolio in addition to acting as central bank reserves. Understanding how...