A Note on Entrepreneurial Risk, Capital Market Imperfections, and Heterogeneity
AbstractEmpirical 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.
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Bibliographic InfoPaper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 409.
Length: 16 pages
Date of creation: 2010
Date of revision:
Publication status: Published in Macroeconomic Dynamics, Cambridge University Press, vol. 14(02), pages 269-284, April.
Wealth Distribution; Idiosyncratic Entrepreneurial Risk; Incomplete Capital Markets;
Other versions of this item:
- Luo, Yulei & Gong, Liutang & Zou, Heng-fu, 2010. "A Note On Entrepreneurial Risk, Capital Market Imperfections, And Heterogeneity," Macroeconomic Dynamics, Cambridge University Press, vol. 14(02), pages 269-284, April.
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