I identify three sources of risk for the tax shields: two of them associated to the risk of debt and one associated to the operating risk. I present a set of conditions for defining risky debt associated to cash flow and not to accounting earnings. I explain why realization of tax shields for...

Classical approaches to estimation and decisions requiring estimation often are at odds. When values critical to the decision are convex or concave functions of unknown parameters, the statistician's estimation error adjustments are the opposite of what is appropriate for the decision. We...

We study the impact of risky human capital in life-cycle portfolio choice and survey the academic literature on the optimal asset allocation over the individual's life-cycle. A distinction is made between the riskless conception of human capital as having bond-like characteristics, and the risky...

This paper offers several contributions to actual research and discussion on monetary policy. It clarifies the relationship between uncertainty of inflation persistence and optimal monetary policy and discusses the consequences of the recent Blanchard proposal to implement a higher inflation...

This study examines how stakeholders exert an influence on product design decisions in the presence of exogenous uncertainty. Hitherto, research has traditionally viewed firms as one entity, and has prescribed an "optimal"' product design decision at firm level. Inspired by field studies at...

Although the threat of rare economic disasters can have large effect on asset prices, difficulty in inference regarding both their likelihood and severity provides the potential for disagreements among investors. Such disagreements lead investors to insure each other against the types of...

It has been argued that the threat of regulatory intervention affects firm behavior. We investigate the pricing decision of the dominant firm under regulatory threat, considering the probability of intervention as a function of the price. Our focus is on the case where the potential divestiture...

The aim of this paper is to verify whether efficient portfolios, obtained using traditional tools of asset allocation, provide real diversification of risk, in addition to the division of capital into different asset classes. It is shown how portfolios that seem diversified in their capital...

This paper analyzes the transition from a pay-as-you-go to a fully funded pension system within the framework of endogenous growth in the presence of uncertainty. Gyárfás and Marquardt (2001) prove the possibility of a Pareto improving conversion in a certain world. Two distinct kinds of...