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Economic uncertainty has to do with the consequences of actions under different circumstances. This raises two questions: First, how sensitive are the outcomes of actions to variations in the environment? Second, how clearly can we distinguish between environments? Robustness comes at the price...
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increase in the cross-country correlations of cash flow shocks raises the risk of a globally diversified portfolio at all … risk at long horizons and does not diminish the benefits of global portfolio diversification to long-term investors …. Empirically, we find that increased correlations of discount rate shocks resulting from financial globalization appear to be the …
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Uncertainty in economics is generated by “nature” but also by the model we use to “produce the future”. The production of the future comprises besides the allocation of resources on different instruments (technologies, financial products) also the design of the instruments....
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