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In recent decades, the world has faced an increasing number of natural and man-made disasters. Such disasters include tsunamis, earthquakes, the current ongoing financial crisis, terrorism, riots, and wars. These disasters generate tremendous social and economic costs, especially for the poor in...
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probability of disaster leads to a collapse of investment and a recession, an increase in risk spreads, and a decrease in the … shocks to aggregate uncertainty, I introduce a small, time-varying risk of economic disaster in a standard real business … cycle model. The paper establishes two simple theoretical results: first, when the probability of disaster is constant, the …
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prices. An increase in the risk of disaster leads to a collapse of investment and a recession, with no current or future …-varying risk of economic disaster. Both asset prices and macroeconomic aggregates respond to this time-varying risk. The model is … risky securities increase. To assess the empirical validity of the model, I infer the probability of disaster from observed …
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An intertemporal optimal strategy for accumulation of reversible capital and management of an exhaustible resource is analyzed for a global economy when resource depletion generates discharges that add to a stock pollutant that affects the likelihood for hitting a tipping point or threshold of...
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probability of disaster leads to a collapse of investment and a recession, an increase in risk spreads, and a decrease in the … shocks to aggregate uncertainty, I introduce a small, time-varying risk of economic disaster in a standard real business … cycle model. The paper establishes two simple theoretical results: first, when the probability of disaster is constant, the …
Persistent link: https://www.econbiz.de/10012463250