?url_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Adc&rft.relation=http%3A%2F%2Feprints.imtlucca.it%2F2220%2F&rft.title=Can+risk+aversion+really+explain+the+negative+investment-uncertainty+relationship%3F&rft.creator=Saltari%2C+Enrico&rft.creator=Ticchi%2C+Davide&rft.subject=HB+Economic+Theory&rft.description=This+paper+shows+the+role+of+risk+aversion+and+intertemporal+substitutability+in+the+investment-uncertainty+relationship.+Using+recursive+preferences%2C+the+paper+demonstrates+that+not+only+the+degree+of+risk+aversion+is+important+in+determining+the+sign+of+the+investmentuncertainty+relationship+but+that+the+intertemporal+substitution+elasticity+also+plays+a+crucial+role.+This+cannot+be+captured+in+the+traditional+expected+utility+set-up+as+risk+aversion+and+intertemporal+substitutability+are+determined+by+the+same+parameter.+In+particular%2C+the+paper+shows+that+risk+aversion+can+explain+the+negative+relationship+between+investment+and+uncertainty+only+in+a+static+context.+In+a+dynamic+framework%2C+the+linkage+between+periods+can+lead+risk+aversion+to+have+a+positive+e%C2%A4ect+on+investment+when+uncertainty+increases.+Indeed%2C+the+e%C2%A4ects+deriving+from+the+linkage+between+periods+depend+by+the+intertemporal+substitution+elasticity%3A+under+low+intertemporal+substitutability%2C+greater+risk+aversion+can+lead+to+higher+investment+when+uncertainty+increases.+Moreover%2C+the+paper+shows+that+with+CRRA+preferences+investment+should+be+positively+correlated+with+the+degree+of+uncertainty+for+reasonable+values+of+the+coe%C2%A2cient+of+relative+risk%0D%0Aaversion&rft.date=2000&rft.type=Working+Paper&rft.type=NonPeerReviewed&rft.identifier=++Saltari%2C+Enrico+and+Ticchi%2C+Davide++Can+risk+aversion+really+explain+the+negative+investment-uncertainty+relationship%3F++Working+Paper++%23+%2F2000++++++++(Unpublished)+++