Replication data for: Safety Traps
- Benhima, Kenza
- Massenot, Baptiste
AbstractFear of risk provides a rationale for protracted economic downturns. We develop a real business cycle model where investors with decreasing relative risk aversion choose between a risky and a safe technology that exhibit decreasing returns. Because of a feedback effect from the interest rate to risk aversion, two equilibria can emerge: a standard equilibrium and a "safe" one in which investors invest in safer assets. We refer to the dynamics of this second equilibrium as a safety trap because it is self-reinforcing as investors accumulate more wealth and show it to be consistent with Japan's lost decade.
Is supplement to
DOI: 10.1257/mac.5.4.68 (Text)
Benhima, Kenza, and Baptiste Massenot. “Safety Traps.” American Economic Journal: Macroeconomics 5, no. 4 (October 2013): 68–106. https://doi.org/10.1257/mac.5.4.68.
- ID: 10.1257/mac.5.4.68 (DOI)
Update Metadata: 2020-05-18 | Issue Number: 2 | Registration Date: 2019-12-07