Insurance profits exhibit cyclical behavior that has been attributed to capital market constraints. We show that changes in interest rates simultaneously affect the insurer's capital structure and the equilibrium underwriting profit. Depending upon asset and liability maturity structure, capital...

Although financial pricing models imply that profits of property-liability insurance firms should conform to an unpredictable time series process, cycles are widely reported. Some controversy exists as to whether the "underwriting cycle" is a mere accounting artifact or whether it has real...

Essay I addresses an apparent paradox: risk managers try to avoid negative earnings surprises, yet they hedge risks uninformative of the value of the company. Using a game-theoretic model with informational asymmetry between insiders (managers) and outsiders (investors), this is shown to be a...

We evaluate the labor supply response in a stochastic overlapping generations model with incomplete markets and a non separable utility function in labor and consumption. Using a simulated panel from the model, we calculate the labor supply response to anticipated changes in wages (holding the...