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The authors study an equilibrium asset pricing model with several Lucas (1978) trees subject to event risk, that is, the possibility that trees experience unexpected disasters. They exploit the market clearing mechanism, in the presence of multiple positive net supply assets, to show that the implications of disasters for some cash-flows extend to the valuation of seemingly unrelated ones. Price-dividend ratios, risk premia, credit-spreads depend on the share of aggregate supply of each tree, but the endogeneity of risk neutral probabilities of disaster implies that the asset pricing implications of event risk go beyond the effects analyzed by the 'Multiple tree' literature so far.
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