Empirical formulas for economic fluctuations: Towards a new justification

To avoid crisis developments, it is important to make financial decisions based on the models which correct predict the probabilities of large-scale economic fluctuations. At present, however, most financial decisions are based on Gaussian random-walk models, models which are known to underestimate the probability of such fluctuations. There exist better empirical models for describing these probabilities, but economists are reluctant to use them since these empirical models lack convincing theoretical explanations. To enhance financial stability and avoid crisis situations, it is therefore important to provide theoretical justification for these (more) accurate empirical models. Such a justification is provided in this paper.