-forming preferences raise risk aversion, increasing the importance of the precautionary savings channel through which volatility … savings is influenced by fluctuations in the volatilities of disturbances that hit the economy. It uses a simple New Keynesian …

the zero-borrowing constraint is a lot weaker. More surprisingly, when I introduce idiosyncratic labor income risk in an …This paper analyzes how the combination of borrowing constraints and idiosyncratic risk affects the equity premium in … idiosyncratic risk increases the equity premium by 70 percent, which means that the mechanism described in Constantinides, Donaldson …

We study the effects of permanent and temporary income shocks on precautionary saving and investment in a "store …

We study the effects of permanent and temporary income shocks on precautionary saving and investment in a ""store …

We propose a novel measure of risk perceptions: the price of volatile stocks (PVSt), defined as the book …-to-market ratio of low-volatility stocks minus the book-to-market ratio of high-volatility stocks. PVSt is high when perceived risk … directly measured from surveys and option prices is low. When perceived risk is high according to our measure, safe asset …