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A Note on Entrepreneurial Risk, Capital Market Imperfections, and Heterogeneity
Macroeconomic Dynamics (2010)
  • Yulei Luo, The University of Hong Kong
  • Liutang Gong, Peking University
  • Heng-fu Zou
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.
Keywords
  • Wealth Distribution,
  • Idiosyncratic Entrepreneurial Risk,
  • Incomplete Capital Markets
Disciplines
Publication Date
April, 2010
Citation Information
Yulei Luo, Liutang Gong and Heng-fu Zou. "A Note on Entrepreneurial Risk, Capital Market Imperfections, and Heterogeneity" Macroeconomic Dynamics Vol. 14 Iss. 2 (2010)
Available at: http://works.bepress.com/yulei_luo/7/