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...

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Main Authors:	Hevia, Constantino, Servén, Luis
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	AGENTS APPLICATIONS ASSET HOLDINGS ASSET PORTFOLIOS BANK LOANS BONDS BORROWING BUSINESS CYCLES CAPITAL CONTROLS CAPITAL MOBILITY CAPITAL MOVEMENTS CONSUMERS CONSUMPTION SMOOTHING COUNTRY RISK COUNTRY RISKS DATA AVAILABILITY DEBT DEFAULT RISK DEGREE OF RISK DEGREES OF RISK DERIVATIVES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DISPOSABLE INCOME DOMESTIC CREDIT ECONOMETRICS ECONOMICS EMERGING ECONOMIES ENFORCEABILITY EQUITY PORTFOLIOS FINANCIAL INTEGRATION FINANCIAL OPENNESS FOREIGN ASSET FOREIGN ASSET POSITION FOREIGN ASSETS FOREIGN CAPITAL FOREIGN DEBT FOREIGN DIRECT INVESTMENT FUTURE GROWTH GLOBALIZATION GROWTH RATE GROWTH RATES HOME COUNTRY INCOME INCOME GROUP INCOME GROWTH INCOME SHOCKS INCOMES INDUSTRIAL COUNTRIES INDUSTRIAL COUNTRY INNOVATION INNOVATIONS INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BUSINESS INTERNATIONAL CAPITAL INTERNATIONAL ECONOMICS INTERNATIONAL PORTFOLIO INTERNATIONAL PORTFOLIOS INVESTMENT ASSETS LIABILITY MARGINAL UTILITIES OF CONSUMPTION PARTIAL RISK PERMANENT INCOME HYPOTHESIS POLITICAL ECONOMY PORTFOLIO PORTFOLIOS PRIVATE SECTOR CREDIT RISK AVERSION RISK SHARING STOCKS TRADING TRANSACTION TRANSACTION COSTS WORLD DEVELOPMENT INDICATORS financial globalization
Online Access:	http://documents.worldbank.org/curated/en/2013/06/17848808/partial-consumption-insurance-financial-openness-across-world http://hdl.handle.net/10986/15840

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spelling	okr-10986-158402021-04-23T14:03:23Z Partial Consumption Insurance and Financial Openness Across the World Hevia, Constantino Servén, Luis AGENTS APPLICATIONS ASSET HOLDINGS ASSET PORTFOLIOS BANK LOANS BONDS BORROWING BUSINESS CYCLES CAPITAL CONTROLS CAPITAL MOBILITY CAPITAL MOVEMENTS CONSUMERS CONSUMPTION SMOOTHING COUNTRY RISK COUNTRY RISKS DATA AVAILABILITY DEBT DEFAULT RISK DEGREE OF RISK DEGREES OF RISK DERIVATIVES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DISPOSABLE INCOME DOMESTIC CREDIT ECONOMETRICS ECONOMICS EMERGING ECONOMIES ENFORCEABILITY EQUITY PORTFOLIOS FINANCIAL INTEGRATION FINANCIAL OPENNESS FOREIGN ASSET FOREIGN ASSET POSITION FOREIGN ASSETS FOREIGN CAPITAL FOREIGN DEBT FOREIGN DIRECT INVESTMENT FUTURE GROWTH GLOBALIZATION GROWTH RATE GROWTH RATES HOME COUNTRY INCOME INCOME GROUP INCOME GROWTH INCOME SHOCKS INCOMES INDUSTRIAL COUNTRIES INDUSTRIAL COUNTRY INNOVATION INNOVATIONS INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BUSINESS INTERNATIONAL CAPITAL INTERNATIONAL ECONOMICS INTERNATIONAL PORTFOLIO INTERNATIONAL PORTFOLIOS INVESTMENT ASSETS LIABILITY MARGINAL UTILITIES OF CONSUMPTION PARTIAL RISK PERMANENT INCOME HYPOTHESIS POLITICAL ECONOMY PORTFOLIO PORTFOLIOS PRIVATE SECTOR CREDIT RISK AVERSION RISK SHARING STOCKS TRADING TRANSACTION TRANSACTION COSTS WORLD DEVELOPMENT INDICATORS financial globalization 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. 2013-09-26T14:02:03Z 2013-09-26T14:02:03Z 2013-06 http://documents.worldbank.org/curated/en/2013/06/17848808/partial-consumption-insurance-financial-openness-across-world http://hdl.handle.net/10986/15840 English en_US Policy Research Working Paper;No. 6479 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	AGENTS APPLICATIONS ASSET HOLDINGS ASSET PORTFOLIOS BANK LOANS BONDS BORROWING BUSINESS CYCLES CAPITAL CONTROLS CAPITAL MOBILITY CAPITAL MOVEMENTS CONSUMERS CONSUMPTION SMOOTHING COUNTRY RISK COUNTRY RISKS DATA AVAILABILITY DEBT DEFAULT RISK DEGREE OF RISK DEGREES OF RISK DERIVATIVES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DISPOSABLE INCOME DOMESTIC CREDIT ECONOMETRICS ECONOMICS EMERGING ECONOMIES ENFORCEABILITY EQUITY PORTFOLIOS FINANCIAL INTEGRATION FINANCIAL OPENNESS FOREIGN ASSET FOREIGN ASSET POSITION FOREIGN ASSETS FOREIGN CAPITAL FOREIGN DEBT FOREIGN DIRECT INVESTMENT FUTURE GROWTH GLOBALIZATION GROWTH RATE GROWTH RATES HOME COUNTRY INCOME INCOME GROUP INCOME GROWTH INCOME SHOCKS INCOMES INDUSTRIAL COUNTRIES INDUSTRIAL COUNTRY INNOVATION INNOVATIONS INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BUSINESS INTERNATIONAL CAPITAL INTERNATIONAL ECONOMICS INTERNATIONAL PORTFOLIO INTERNATIONAL PORTFOLIOS INVESTMENT ASSETS LIABILITY MARGINAL UTILITIES OF CONSUMPTION PARTIAL RISK PERMANENT INCOME HYPOTHESIS POLITICAL ECONOMY PORTFOLIO PORTFOLIOS PRIVATE SECTOR CREDIT RISK AVERSION RISK SHARING STOCKS TRADING TRANSACTION TRANSACTION COSTS WORLD DEVELOPMENT INDICATORS financial globalization
spellingShingle	AGENTS APPLICATIONS ASSET HOLDINGS ASSET PORTFOLIOS BANK LOANS BONDS BORROWING BUSINESS CYCLES CAPITAL CONTROLS CAPITAL MOBILITY CAPITAL MOVEMENTS CONSUMERS CONSUMPTION SMOOTHING COUNTRY RISK COUNTRY RISKS DATA AVAILABILITY DEBT DEFAULT RISK DEGREE OF RISK DEGREES OF RISK DERIVATIVES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DISPOSABLE INCOME DOMESTIC CREDIT ECONOMETRICS ECONOMICS EMERGING ECONOMIES ENFORCEABILITY EQUITY PORTFOLIOS FINANCIAL INTEGRATION FINANCIAL OPENNESS FOREIGN ASSET FOREIGN ASSET POSITION FOREIGN ASSETS FOREIGN CAPITAL FOREIGN DEBT FOREIGN DIRECT INVESTMENT FUTURE GROWTH GLOBALIZATION GROWTH RATE GROWTH RATES HOME COUNTRY INCOME INCOME GROUP INCOME GROWTH INCOME SHOCKS INCOMES INDUSTRIAL COUNTRIES INDUSTRIAL COUNTRY INNOVATION INNOVATIONS INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BUSINESS INTERNATIONAL CAPITAL INTERNATIONAL ECONOMICS INTERNATIONAL PORTFOLIO INTERNATIONAL PORTFOLIOS INVESTMENT ASSETS LIABILITY MARGINAL UTILITIES OF CONSUMPTION PARTIAL RISK PERMANENT INCOME HYPOTHESIS POLITICAL ECONOMY PORTFOLIO PORTFOLIOS PRIVATE SECTOR CREDIT RISK AVERSION RISK SHARING STOCKS TRADING TRANSACTION TRANSACTION COSTS WORLD DEVELOPMENT INDICATORS financial globalization Hevia, Constantino Servén, Luis Partial Consumption Insurance and Financial Openness Across the World
relation	Policy Research Working Paper;No. 6479
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Hevia, Constantino Servén, Luis
author_facet	Hevia, Constantino Servén, Luis
author_sort	Hevia, Constantino
title	Partial Consumption Insurance and Financial Openness Across the World
title_short	Partial Consumption Insurance and Financial Openness Across the World
title_full	Partial Consumption Insurance and Financial Openness Across the World
title_fullStr	Partial Consumption Insurance and Financial Openness Across the World
title_full_unstemmed	Partial Consumption Insurance and Financial Openness Across the World
title_sort	partial consumption insurance and financial openness across the world
publisher	World Bank, Washington, DC
publishDate	2013
url	http://documents.worldbank.org/curated/en/2013/06/17848808/partial-consumption-insurance-financial-openness-across-world http://hdl.handle.net/10986/15840
_version_	1764431586928885760

Partial Consumption Insurance and Financial Openness Across the World

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