Munich Personal RePEc Archive

Uninsurable Entrepreneurial Risk, Capital Market Imperfections, and Heterogeneity in the Macroeconomy

Luo, Yulei and Zou, Heng-fu (2008): Uninsurable Entrepreneurial Risk, Capital Market Imperfections, and Heterogeneity in the Macroeconomy.

[img]
Preview
PDF
MPRA_paper_59450.pdf

Download (156kB) | Preview

Abstract

Empirical evidence shows that entrepreneurs hold a large fraction of wealth, have higher saving rates than workers, and face substantial uninsurable entrepreneurial and investment risks. This paper constructs a heterogeneous-agent general equilibrium model with uninsurable entrepreneurial risk and capital market imperfections to explore the implications of uninsurable entrepreneurial risk for wealth distribution and aggregate activity in an incomplete market economy. It is shown that entrepreurial risk can substantially affect both the wealth distribution and the macroeconomy.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.