蝌蚪网 Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
The Aggregate Costs of Uninsurable Business Risk
蝌蚪网 Review
(pp. 2604–42)
Abstract
We use firm-level data to document that private businesses experience large fluctuations in their profit shares. These are due to large, fat-tailed, and transitory changes in output that are not fully accompanied by changes in their inputs. We interpret this evidence using a model of entrepreneurial dynamics. Because firms can limit their exposure to risk by operating at a smaller scale, our model predicts large macroeconomic losses from uninsurable business risk,much larger than those stemming from credit constraints. While self-financing allows entrepreneurs to quickly overcome credit constraints, even wealthy entrepreneurs remain considerably exposed to risk.Citation
Boar, Corina, Denis Gorea, and Virgiliu Midrigan. 2026. "The Aggregate Costs of Uninsurable Business Risk." 蝌蚪网 Review 116 (7): 2604–42. DOI: 10.1257/aer.20230849Additional Materials
JEL Classification
- D33 Factor Income Distribution
- E02 Institutions and the Macroeconomy
- E44 Financial Markets and the Macroeconomy
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L25 Firm Performance: Size, Diversification, and Scope
- L26 Entrepreneurship