9809010 Shiller This study of management of income and inflation risks consists of three parts: I. Institutions for Intergenerational and International Risk Management. Overlapping generations models aree used to study the role of government in intergenerational and international risk management. Partial government intervention in risk management, such as social security trust fund investments, may be justified because individuals cannot insure risks after they have been realized. Optimal social security systems from a risk-management perspective are derived, as well as optimal government investment in risky assets. Some data analysis of national incomes and speculative prices are undertaken to give some perspectives of the parameters of such models, analysis directed at measuring short-run as well as long-run uncertainty and at discovering the long-run correlations of existing assets' returns with national income innovations. II. Indexed Units of Account. The experience of countries that have adopted indexed units of account, such as Chile with its unidad de fomento, is studied. The indexed units of account are considered from a theoretical perspective, for possible application of the units in other countries. The optimal choice of index number formula is considered. The dynamic effects in macroeconomic equilibrium of expressing prices in terms of the units are considered for the case where some but not all prices are rigid. III. Miscellaneous Related Topics. A. Psychological literature is applied to issues on public risk management and saving. B. Econometric work on forecastability of financial market returns is extended and C. Improved indices of factors in individual labor incomes are developed.
