In this paper, we address the identification and estimation of insurance models where insurees have private information about their risk and risk aversion. The model includes random damages and allows for several claims, while insurees choose from a finite number of coverages. We show that the...

Loneliness poses a serious health risk: Along with negatively impacting life quality, it can even shorten the life span. This Weekly Report investigates loneliness in Germany using Socio-Economic Panel (SOEP) data from 2021 on loneliness. The analyses highlight the prevalence of three facets of...

The pricing kernel is an important tool for understanding asset prices, expected returns, and investor preferences. However, empirical findings often reveal deviations from theoretical predictions, leading to the so-called "pricing kernel puzzle". This article explores the pricing kernel under...

As climate change intensifies, countries experience varying degrees of vulnerability and resilience that influence their capacity to withstand and recover from environmental, economic, and social shocks. This study introduces the Multidimensional Vulnerability and Lack of Resilience Index...

This study examines how experiencing a pandemic affects household investment behaviors. By leveraging cross-state variations in the H1N1 mortality rate in 2009, our difference-in-differences analysis reveals interesting findings. Although the pandemic does not significantly affect stock market...

This study examines the impact of temperature uncertainty on firm fixed capital growth using a unique dataset that merges extensive firm-level financial data with detailed grid-level weather data. The analysis reveals a strong negative relationship between temperature uncertainty and fixed...

The Drought Risk and Resilience Assessment (DRRA) offers a structured methodology for evaluating drought risk and enhancing resilience. The objective is to transition from reactive to proactive drought management, reducing the impacts of droughts. When applied, a DRRA can support task teams and...

Purpose - Political factors play a crucial role in China's initial public offering (IPO) market due to its distinctive institutional context (i.e. "economic decentralization" and "political centralization"). Given the significant level of IPO underpricing in China, we examine the impact of local...

Promoting household-level adaptation measures is an important part of climate change adaptation policies to reduce vulnerability to droughts for (agro-)pastoral communities in sub-Saharan Africa. To develop effective supportive policies, it is important to get a better understanding of the needs...

Climate-linked bonds, issued by governments and supranational organizations, are pivotal in advancing towards a net-zero economy. These bonds adjust their payoffs based on climate variables such as average temperature and greenhouse gas emissions, providing investors a hedge against long-term...

We investigate how digital transformation affects corporate risk-taking by using the data of China's A-share listed companies from 2012 to 2021, and examines the mediating role of managerial ability. The results demonstrate that digital transformation is significantly and positively related to...

We introduce a new Economic Distress Index (EDI), which incorporates information from all economic sectors as a device for real-time monitoring of financial stability risks in the euro area. Our approach is based on structural models of credit risk and incorporates market and balance sheet...

In recent years, major exporting economies experienced rising geopolitical risk. From the perspective of the US and the euro area, we employ detailed product data panels to study the consequences of trading-partner geopolitical risk shocks on bilateral imports. We find that these shocks lower...

This study examines the dynamic interconnectedness of economic policy uncertainty (EPU) among Latin American economies - Brazil, Chile, Colombia, and Mexico - and significant international regions, including the United States, Europe, and Japan, as well as a global EPU index. Using a...

Forecasting stock markets is challenging due to the influence of various internal and external factors compounded by the effects of globalization. This study introduces a data-driven approach to forecast S&P 500 returns by incorporating macroeconomic indicators including gold and oil prices, the...

This paper presents a novel approach to prognosing European economic crises through the development of an economic-financial risk sensitivity model. The model integrates key macroeconomic indicators such as government deficit (NETGDP), GINI coefficient, social protection expenditure (ExSocP),...

We propose and axiomatize a new model of incomplete preferences under uncertainty, which we call hope-and-prepare preferences. An act is considered more desirable than another when, and only when, both an optimistic evaluation, computed as the welfare level attained in a best-case scenario, and...

While there is a large body of literature on oil uncertainty-equity prices and/or returns nexus, an associated important question of how oil market uncertainty affects stock market bubbles remains unanswered. In this paper, we first use the Multi-Scale Log-Periodic Power Law Singularity...

Wavelet coherence analysis (WCA) examines the dynamic interactions between economic policy uncertainty (EPU) in Brazil, Chile, Colombia, and Mexico and key external variables, using monthly data from 2010 to 2022. The findings reveal the following: (i) medium-term co-movements (4-16 months)...

Interrelated global crises - climate change, pandemics, loss of ecosystem services and biodiversity - pose risks that demand collective solutions. Uncertainty about others' behavior, coupled with the dependence on some to take collective efforts to mitigate risks for all (e.g. conservation of...

Heterogeneous beliefs among market participants can lead to questionable speculative trading that goes beyond any risk-sharing motives. We demonstrate that such unwarranted betting behavior in market equilibrium can be mitigated by introducing nonlinear pricing for ambiguous contracts, without...

Indonesia is exposed to both climate change transition risks and physical risks. With primary energy supply heavily dominated by fossil fuels, like many other countries, and as a major exporter of coal and liquefied natural gas, Indonesia is exposed to risks from the transition toward a...