A Note on Entrepreneurial Risk, Capital Market Imperfections, and Heterogeneity

Yulei Luo (), Liutang Gong and Heng-Fu Zou ()

No 409, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

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 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2010
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Citations: View citations in EconPapers (2)

Published in Macroeconomic Dynamics, Cambridge University Press, vol. 14(02), pages 269-284, April.

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Related works:
Journal Article: A NOTE ON ENTREPRENEURIAL RISK, CAPITAL MARKET IMPERFECTIONS, AND HETEROGENEITY (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:409

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