This paper illustrates a case where an increase of the in-terest rates improves the economic activity and reduces incomeinequality. This theoretical exercise deals with a simple model ofdisequilibrium with accountant identities of budget constraints. Inaddition, and following previous models,...

We develop a simple test for deviations from power law tails, which is based on the asymptotic properties of the empirical distribution function. We use this test to answer the question whether great natural disasters, financial crashes or electricity price spikes should be classified as dragon...

The main objective of this paper is to present a reading of The Arcades Project by Walter Benjamin in the context of the financial crisis, in particular, reflect from a few fragments of Benjamin's work appear to lie around a Black Swan. The recovery of the fragments of The Arcades seems...

How does Nassim Taleb's notion of uncertainty compare with Keynes's? In describing "black swan events" as rare, consequential, unforecastable events, Taleb has stressed how statistical risk differs from intractable uncertainty. This difference had been similarly underscored by Keynes in his...

Previous research documents two pairs of inconsistent reactions to rare events: 1) Studies of probability judgment reveal conservatism which implies overestimation of rare events, and overconfidence which implies underestimation of rare events. 2) Studies of choice behavior reveal overweighting...