Hedging Permanent Income Shocks

The authors thank the Department Editor, Lukas Schmid, an Associate Editor, and two anonymous referees for many insightful comments and suggestions. The authors also thank Laurent Bach, Marie Brière, Laurent Calvet, Bernard Dumas, Davide Fiaschi, Olga Goldfayn-Frank, Christian Gollier, George Korniotis, Lorenz Kueng, Roberto Marfé, Alex Michaelides, Ignacio Monzon, Kim Peijnenburg, Henriette Prast, Theo Nijman, Alberto Quaini, Pascal St-Amour, Luis Viceira, as well as participants in the 2025 AFA Meetings, the 2024 CEPR Advanced Forum for Financial Economics, the 2024 Netspar International Pension Workshop, the 2023 Paris Financial Risks International Forum, the 2023 ZEW Mannheim Conference on Ageing and Sustainable Finance, the 2022 CEPR European Conference on Household Finance, the 2022 European Meetings of the Econometric Society, 2021 CeRP Workshop, the 2021 Inquire Europe webinar, the 2020 Consob ESMA Bocconi webinar, the OEE Conference 2020, the 2019 Meetings of the European Economic Association, the International Association of Applied Econometrics, the Italian Labor Economics Association, the 2019 Paris Finance Meeting (Eurofidai), and seminars at the ECB, Imperial College London, the University of Pisa and USI Lugano for helpful suggestions. The authors gratefully acknowledge financial support from the Institute for Quantitative Investment Research (INQUIRE) Europe, the Observatoire de l’Epargne Européenne, and the Italian MIUR (“Department of Excellence” 2018–2022, 2023–2027), and thank the Competence Centre for Scientific Computing C3S (University of Torino) for providing access to the computing cluster OCCAM.