(Harvest) Our thinking of systematic risk has to be in two dimensions; one, the time series impact and two, the cross-sectional impact. These financial insights are coming from Markus Brunnermeier in his piece “Paradox of Prudence” . The time series component focuses with the build-up of risks, and the cross-sectional component focuses on the transfer of risks. This leads to two paradoxes.
The “Paradox of Prudence” – It is real and needs your attention
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