utility, which has two key features. First, intertemporal substitution and risk aversion are disentangled. Second, the … when the departure from standard expected utility with rational expectations is small. In addition, we show that RI … increases the implied equity premium because inattentive investors with recursive utility face greater long-run risk and thus …

This paper shows how risk may aggravate fluctuations in economies with imperfect insurance and multiple assets. A two … unique under full insurance. If investment is fully insured but unemployment risk is uninsured, the precautionary saving … poverty traps or persistent multiplicity. Greater insurance is doubly beneficial in this context since it can both prevent …