to college households in terms of welfare. Chapter 2 disentangles the effect of demographic change on returns to risk …. Chapter 3 develops a method for computing transitional dynamics in heterogeneous agent models with aggregate risk if these …

can decelerate growth in the absence of any level shocks. In contrast to level risk, which is always welfare reducing for … a risk-averse household, volatility risk can increase or decrease welfare, depending on model parameters. When … calibrated to U.S. data, the model finds that the welfare cost of volatility risk is largely negligible under plausible model …