We develop a new approach for solving the optimal retirement problem for an individual with an unhedgeable income risk …. The income risk stems from a forced unemployment event, which occurs as an exponentially-distributed random shock. The … optimal retirement problem is to determine the individual's optimal consumption and investment behaviors and optimal …

investment option. Given one possible market price of risk each agent can maximize the exponential utility from three sources of …Short term climate events such as the sea surface temperature anomaly known as El Niño are financial risk sources … leading to incomplete markets. To make such risk tradable, we use a market model in which a climate index provides an extra …

Dynamic stochastic general equilibrium models with ex-post heterogeneity due to idiosyncratic risk have to be solved … space due to aggregate risk. Existing global solution methods often assume bounded rationality in terms of a parametric law … the rational expectations equilibrium. Economically, I find that higher levels of idiosyncratic risk sharing lead to …

endogenous firing as well as a short-time work decision. In recessions, short-time work reduces the unemployment risk of workers … replacement rate can be more effective compared to an increase of the unemployment benefit replacement rate. …