The optimal asset allocation and choice between risky and risk-free assets in a model with human capital

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The optimal asset allocation and choice between risky and risk-free assets in a model with human capital included, depends critically on the covariance (or correlation) between shocks to the wage process and stock returns. This number obviously depends on your particular job and career prospects. Please discuss howyouwould go about doing calibration for this coefficient and what type of data you would need in order to get a statistically significant estimate.

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