An authoritative and comprehensive graduate textbook on the modern insurance sector The traditional role of insurers is to insure idiosyncratic risk through products such as life annuities, life insurance, and health insurance. With the decline of private defined benefit plans and government pension plans around the world, insurers are increasingly taking on the role of insuring market risk through minimum return guarantees. Insurers also use more complex capital management tools such as derivatives, off-balance-sheet reinsurance, and securities lending. Financial Economics of Insurance provides a unified framework to study the impact of financial and regulatory frictions as well as imperfect competition on all insurer decisions. The book covers all facets of the modern insurance sector, guiding readers through its complexities with empirical facts, institutional details, and quantitative modeling. An up-to-date textbook for graduate students in economics, finance, and insurance Covers a broad range of topics, including insurance pricing, contract design, reinsurance, portfolio choice, and risk management Provides promising new directions for future research Can be taught in courses on asset pricing, corporate finance, industrial organization, and public economics An invaluable resource for policymakers seeking an empirical and institutional account of today's insurance sector

This thesis consists of three essays on the relationship between consumption, the business cycle, and expected returns on financial assets. The first essay is "A Consumption-Based Explanation of Expected Stock Returns." A revised version of the essay was published in The Journal of Finance 61: 2 (April 2006), pp. 539-580. The second essay is "Estimating the Elasticity of Intertemporal Substitution When Instruments Are Weak." The essay was published in The Review of Economics and Statistics 86: 3 (August 2004), pp. 797-810. The third essay is "Efficient Tests of Stock Return Predictability," coauthored by John Y. Campbell. A revised version of the essay was published in the Journal of Financial Economics 81: 1 (July 2006), pp. 27-60. The thesis was awarded the 2005 Zellner Thesis Award in Business and Economic Statistics by the American Statistical Association.