TD n. 615 2013
Enrique Kawamura, Yves Balasko.
Popular press and some practitioners have warned against threats that buying risky
assets pose on agents saving for retirement, children education and other uses. This pa-
per shows that in a standard two-period general equilibrium model where some savers
have no risk-sharing motives, there exists a non-negligible set of economies (endow-
ments) and equilibria at which every economic agent is better off if some risky assets
are added to riskless securities. Numerical examples actually show that the measure of
the set of economies (endowments) with equilibrium allocations associated with trading
risky assets that are Pareto superior to when there are only riskless assets can be larger
than half the measure of the full set of economies.