1. Discussion of Michelacci and Schivardi Francesco Caselli

2. Four Questions on Intepretation

3. Theoretical Motivation Volatility of returns in high return projects (exogenous) Productivity (Endogenous)

4. Theoretical Motivation Volatility of returns in high return projects (exogenous) Productivity (Endogenous) With good risk-sharing Opportunities With poor risk-sharing Opportunities

5. Empirical Result Negative coefficent on (Risk-Sharing Opportunity) X (Volatitlity) Consistent with theoretical framework …

6. … but also consistent with Volatility of returns in high return projects (exogenous) Productivity (Endogenous) With good risk-sharing Opportunities With poor risk-sharing Opportunities

7. or with Volatility of returns in high return projects (exogenous) Productivity (Endogenous) With good risk-sharing Opportunities With poor risk-sharing Opportunities

8. or even with Volatility of returns in high return projects (exogenous) Productivity (Endogenous) With good risk-sharing Opportunities With poor risk-sharing Opportunities

9. Therefore I am not yet convinced that Idiosyncratic risk discourages entrepreneurial activity and hinders growth (from abstract) Finding seems to concern the role of risk-diversification opportunities, not risk per se Does this call for a change of title? Role of risk remains an open question

10. From levels to growth rates Theoretical argument framed in temrs of levels Empirics in terms of growth rates Transition is not entirely trivial

11. From project returns to size of investments Theory: investment size constant, but different returns Empirics: results driven partially by amounts invested Reconciliation: high-return projects more capital intensive? That would be interesting

12. Family firms as (inverse) measure of risk-sharing opportunities Idea: concentrated ownership results from lack of diversification opportunities But: many other interpretations possible E.g. suppose family firms are intrinsically more risk averse. Then (family X risk) interaction would be negative Not sure that instrumenting with demographic shocks helps: it isolates variation in family ownership not due to lack of risk-sharing opportunities. Seems to be the opposite of what you want

13. Blonde-Blue-Eye Dummy Identification assumption: Dnk, Nor, Swe, Fin have same coefficients in risk regression Next year: paper by a Scandinavian economist assuming that Portugal, Spain, Italy and Greece have same coefficients in some regression

14. Conclusion Should paper be recast in terms of effects of risk sharing opportunities, rather than risk per se? Tighter link between theoretical arguments and empirical estimates (levels v. growth, productivity v. investment) Can we think of a more convincing measure of risk-sharing opportunities?