Rare disaster

In economics, a rare disaster is a collapse that is infrequent and large in magnitude, having a negative effect on an economy. Rare disasters are important because they provide an explanation of the equity premium puzzle, the behavior of interest rates, and other economic phenomena. The idea was first proposed by Rietz in 1988, as a way to explain the equity premium puzzle. Since then, other economists have added to and strengthened the idea with evidence, but many economists are still skeptical of the theory.

Rare disaster

In economics, a rare disaster is a collapse that is infrequent and large in magnitude, having a negative effect on an economy. Rare disasters are important because they provide an explanation of the equity premium puzzle, the behavior of interest rates, and other economic phenomena. The idea was first proposed by Rietz in 1988, as a way to explain the equity premium puzzle. Since then, other economists have added to and strengthened the idea with evidence, but many economists are still skeptical of the theory.