The Allocation of Resources Under Uncertainty

12 Pages Posted: 21 Dec 2006

See all articles by Harris Dellas

Harris Dellas

University of Bern - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Ana Fernandes

University of Bern - Department of Economics

Date Written: December 2006

Abstract

We study the effects of uncertainty on the allocation of resources in the standard, static, general equilibrium, two-sector, two-factor model. The elasticity of substitution in production vs that in consumption plays a key role in determining whether uncertainty attracts or repels resources. Risk aversion matters, but to a smaller extent, while factor endowments and factor intensities play a more limited role.

Keywords: Uncertainty, general equilibrium, two sector model

JEL Classification: E2, D5, D8

Suggested Citation

Dellas, Harris and Fernandes, Ana, The Allocation of Resources Under Uncertainty (December 2006). Available at SSRN: https://ssrn.com/abstract=952688 or http://dx.doi.org/10.2139/ssrn.952688

Harris Dellas

University of Bern - Department of Economics ( email )

Gesellschaftstrasse 49
Bern, CH-3012
Switzerland
+41 31 631 3989 (Phone)
+41 31 631 3992 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Ana Fernandes (Contact Author)

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, CH-3001
Switzerland

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