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

Author

Listed:
  • Yulei Luo

    (University of Hong Kong)

  • Liutang Gong

    (Peking University)

  • Heng-fu Zou

    (The World Bank
    CEMA at the Central University of Finance and Economics
    Shenzhen University
    IAS at Wuhan University)

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.

Suggested Citation

  • Yulei Luo & Liutang Gong & Heng-fu Zou, 2010. "A Note on Entrepreneurial Risk, Capital Market Imperfections, and Heterogeneity," CEMA Working Papers 409, China Economics and Management Academy, Central University of Finance and Economics.
    • Handle: RePEc:cuf:wpaper:409
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    References listed on IDEAS

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    Cited by:

    1. Federico Esposito, 2017. "Entrepreneurial Risk and Diversification through Trade," Working Papers w201714, Banco de Portugal, Economics and Research Department.
    2. Federico Esposito, 2016. "Risk Diversification and International Trade," 2016 Meeting Papers 302, Society for Economic Dynamics.

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