Consumption correlatedness and risk measurement in economies with non-traded assets and heterogeneous information

Abstract

Risk management institutions can be reinvented in the 21st century in response to the changing nature of economic uncertainties and changing information technology. The COVID-19 pandemic and its effects on the economy provide an example of new kinds of uncertainties to be managed. National and international contracts should manage risks to claims on better-defined economic aggregates and prices of factors of human capital to make for better economic measurements and better risk management opportunities. The failures of international management of the COVID-19 pandemic, including failure to control the spread of misinformation, provide lessons for such new financial arrangements