Assessing the Degree of International Consumption Risk Sharing
This paper examines the extent of consumption risk sharing for a group of 50 high-income and developing countries. The analysis is based on the empirical implementation of a model of partial consumption insurance whose parameters have the natural i...
| Main Authors: | , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/10/26875134/assessing-degree-international-consumption-risk-sharing http://hdl.handle.net/10986/25312 |
| Summary: | This paper examines the extent of
consumption risk sharing for a group of 50 high-income and
developing countries. The analysis is based on the empirical
implementation of a model of partial consumption insurance
whose parameters have the natural interpretation of
coefficients of partial risk sharing even when the 0
hypothesis of perfect risk sharing is rejected. The
estimation results show that high-income countries exhibit
higher degrees of risk sharing than developing countries,
and that the gap between the two country groups appears to
have widened over the period of financial globalization.
Moreover, the pattern of consumption risk sharing is related
to the degree of financial openness: countries with more
open capital accounts, and larger stocks of foreign assets
and liabilities exhibit larger degrees of risk sharing. Yet,
larger countries in terms of gross domestic product show
lower degrees of consumption risk sharing. |
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