Partial Consumption Insurance and Financial Openness Across the World
This paper examines the extent of international consumption risk sharing for a group of 50 industrial and developing countries. The analysis is based on the empirical implementation of a model of partial consumption insurance whose parameters have...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/06/17848808/partial-consumption-insurance-financial-openness-across-world http://hdl.handle.net/10986/15840 |
| Summary: | This paper examines the extent of
international consumption risk sharing for a group of 50
industrial 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.
Estimation results show that rich countries exhibit higher
degrees of risk sharing than developing countries, and that
the gap between both 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 larger stocks of
foreign assets or liabilities exhibit larger degrees of risk
sharing. Furthermore, countries whose foreign asset stocks
are more tilted towards foreign direct investment assets
also show higher degrees of consumption risk sharing. |
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