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Abstract

This study examines how household financial risk tolerance is affected during the period of 2007 and 2009, which covered the eve and through of the financial crisis in the United States and what types of households are associated with the change of risk tolerance. Risk tolerance is measured bz two objective indicators, narrowlz and broadlz defined stock ownership, and a subjective indicator, risk taking attitude. Using panel data from 2007 to 2009 Survez of Consumer Finances, results show that during the financial crisis, the households in general are more risk averse, indicated by withdrawing from stock markets and holding a less risk taking attitude. In addition, Black and Hispanic households are more likely and households with higher education are less likely to withdraw from stock markets. Older households are less likely to change in risk tolerance during the financial crisis, as are richer households. The findings show panel data could generate novel results and contribute to the literature of financial risk tolerance.

 

Abstract

This paper investigates the effects of subnational regionalization on a country’s terms of trade, trade patterns, and its welfare. We show that a countrycan gain from dividing itself into two regions with different factor ratios. Making a region in a countryto have a comparative advantage different from the country as a whole cangenerate a welfare improving terms-of-trade effect. We also show that subnational regionalization can reduce thevolume of trade and or even reverse countries’ trade patterns. This explains theparadox between trade patterns predicted by the standard Heckscher-Ohlin model and those found empirically.