The rare disaster hypothesis suggests that the extraordinarily high postwar U.S. equity premium resulted because … in theory, empirical tests of the rare disaster explanation are scarce. We estimate a disaster-including consumption … for the rare disaster hypothesis, and help reconcile the nexus between real economy and financial markets implied by the …

It is widely recognized that market failureʺ prevents efficient risk sharing in natural disaster insurance. As a …-private partnerships. We define risk selection as a situation where private companies pass insurance of high risk agents on to the public … rate in both high and low risk regions and the existence of a state reinsurer. We show that in our model, risk selection is …