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Author: Philippe Auffret
Publisher: World Bank Publications
ISBN:
Category : Crecimiento economico
Languages : en
Pages : 28
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Book Description
Following Lucas's (1987) standard approach, welfare gains from international risk-sharing have been measured as the percentage increase in consumption levels that leaves individuals indifferent between, autarky and risk-sharing. The author proposes to measure welfare gains as the increase in consumption growth, instead of consumption levels. When the consumption process is non-stationary, the author's proposed measure has several attractive features: it does not depend on the horizon, and it is robust to alternative specifications of the consumption stochastic processes (from geometric Brownian processes, to Orstein-Ulhenbeck mean-reverting processes), and preferences (from constant relative risk aversion preferences to Kreps-Porteus preferences). The author then uses this measure to estimate potential welfare gains from international risk-sharing for a representative U.S. consumer. The author finds that if international risk-sharing leads only to a complete elimination of aggregate consumption volatility (with no impact on consumption growth), it represents gains to a U.S. consumer of only $ 12 a year on average. But if international risk-sharing also permits an increase in consumption growth, it may have a sizable impact on welfare. Each 0.5 percentage point increase in consumption growth, represents gains to a U.S. consumer of about $ 160 a year on average.
Author: Philippe Auffret
Publisher: World Bank Publications
ISBN:
Category : Crecimiento economico
Languages : en
Pages : 28
Get Book Here
Book Description
Following Lucas's (1987) standard approach, welfare gains from international risk-sharing have been measured as the percentage increase in consumption levels that leaves individuals indifferent between, autarky and risk-sharing. The author proposes to measure welfare gains as the increase in consumption growth, instead of consumption levels. When the consumption process is non-stationary, the author's proposed measure has several attractive features: it does not depend on the horizon, and it is robust to alternative specifications of the consumption stochastic processes (from geometric Brownian processes, to Orstein-Ulhenbeck mean-reverting processes), and preferences (from constant relative risk aversion preferences to Kreps-Porteus preferences). The author then uses this measure to estimate potential welfare gains from international risk-sharing for a representative U.S. consumer. The author finds that if international risk-sharing leads only to a complete elimination of aggregate consumption volatility (with no impact on consumption growth), it represents gains to a U.S. consumer of only $ 12 a year on average. But if international risk-sharing also permits an increase in consumption growth, it may have a sizable impact on welfare. Each 0.5 percentage point increase in consumption growth, represents gains to a U.S. consumer of about $ 160 a year on average.
Author: Philippe Auffret
Publisher:
ISBN:
Category :
Languages : en
Pages : 23
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Book Description
Unlike the traditional measure of welfare gains from risk-sharing, the new measure presented here does not depend on the horizon, and it is robust to alternative specifications of the consumption stochastic processes and preferences. This measure shows that if international risk-sharing eliminates volatility in aggregate consumption and leads to greater consumption growth, risk-sharing can have a sizable impact on consumer welfare.Following Lucas's (1987) standard approach, welfare gains from international risk-sharing have been measured as the percentage increase in consumption levels that leaves individuals indifferent between autarky and risk-sharing. Auffret proposes to measure welfare gains as the increase in consumption growth instead of consumption levels. When the consumption process is nonstationary, Auffret's proposed measure has several attractive features: it does not depend on the horizon, and it is robust to alternative specifications of the consumption stochastic processes (from geometric Brownian processes to Orstein-Ulhenbeck mean-reverting processes) and preferences (from constant relative risk aversion preferences to Kreps-Porteus preferences). The author then uses this measure to estimate potential welfare gains from international risk-sharing for a representative U.S. consumer.Auffret finds that if international risk-sharing leads only to a complete elimination of aggregate consumption volatility (with no impact on consumption growth), it represents gains to a U.S. consumer of only $12 a year on average. But if international risk-sharing also permits an increase in consumption growth, it may have a sizable impact on welfare. Each 0.5 percentage point increase in consumption growth represents gains to a U.S. consumer of about $160 a year on average.This paper - a product of the Economic Policy Sector Unit, Latin America and the Caribbean Region - is part of a larger effort in the region to analyze the impact of catastrophic risks on welfare and determine whether the catastrophic insurance function can serve a key developmental role in disaster prone countries. The author may be contacted at
[email protected].
Author:
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 45
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Book Description
Author: Paul Collier
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 26
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Book Description
Not surprisingly, extreme negative export price shocks reduce growth. But these adverse effects can be mitigated through offsetting increases in aid. Indeed, targeting aid to countries experiencing negative shocks appears to be even more important for aid effectiveness than targeting aid to countries with good policies.
Author: Frederic S. Mishkin
Publisher: World Bank Publications
ISBN:
Category : Anti-inflationary policies
Languages : en
Pages : 42
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Book Description
Experience with monetary targeting suggests that although it successfully controlled inflation in Switzerland and especially Germany, the special conditions that made it work reasonably well in those two countries are unlikely to be satisfied elsewhere. Inflation targeting is more likely to improve economic performance in countries that choose to have an independent domestic monetary policy, but there are subtleties in how inflation targeting is done. Lessons from industrial countries should be useful to central banks designing a framework for monetary policy.
Author: Philippe Auffret
Publisher: World Bank Publications
ISBN:
Category : Caribbean Area
Languages : en
Pages : 40
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Book Description
A history of repeated external and domestic shocks has made economic insecurity a major concern across the Caribbean region. Of particular concern to all households, especially the poorest segments of the population, is the exposure to shocks that are generated by catastrophic events or natural disasters. The author shows that despite high consumption growth, the Caribbean region suffers from a high volatility of consumption that decreases household welfare. After presenting some empirical evidence that consumption volatility is higher in the Caribbean region than in the rest of the world, he makes some empirically testable inferences that help explain consumption volatility. The author develops a conceptual framework for analyzing the effects of catastrophic events on household and aggregate welfare. According to this framework, the volatility of consumption comes from production shocks that are transformed into consumption shocks mostly because of underdeveloped or ineffective risk-management mechanisms. Auffret conducts an empirical analysis of the impact of catastrophic events on 16 countries (6 from the Caribbean region and 10 from Latin America) from 1970-99 and shows that catastrophic events lead to: 1) A substantial decline in the growth of output. 2) A substantial decline in the growth of investment. 3) A more moderate decline in consumption growth (most of the decline is in private consumption, while public consumption declines moderately. 4) A worsening of the current account of the balance of payments.
Author: Paul Collier
Publisher: World Bank Publications
ISBN:
Category : Civil war
Languages : en
Pages : 34
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Book Description
The duration of large-scale violent civil conflict increases substantially if the society is composed of a few large ethnic groups, if there is extensive forest cover, and if the conflict has commenced since 1980. None of these factors affect the initiation of conflict. And neither the duration nor the initiation of conflict is affected by initial inequality or political repression.
Author: David P. Ellerman
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 32
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Book Description
This paper inaugurates the mathematical treatment of property theory, proving the two fundamental theorems for the property system that correspond to the two fundamental theorems for the competitive price system.
Author: Philippe Auffret
Publisher: World Bank Publications
ISBN:
Category : Casualty insurance
Languages : en
Pages : 36
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Book Description
The Caribbean region suffers from a high degree of economic volatility. A history of repeated external and domestic shocks has made economic insecurity a major concern across the region. Of particular concern to all households, especially the poorest segments of the population, is the exposure to shocks that are generated by catastrophic events or natural disasters. The author develops a conceptual framework for risk management and shows that the insurance market for catastrophic risk in the Caribbean region remains a "thin" market characterized by "high" prices and "low" transfer of risk. He analyzes the possible market failures which could explain the lack of development of the catastrophe insurance market. Finally he outlines a set of recommendations for public sector interventions.
Author: John Sullivan Wilson
Publisher: World Bank Publications
ISBN:
Category : Developing countries
Languages : en
Pages : 40
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Book Description
How food safety is addressed in the world trade system is critical for developing countries that continue to rely on agricultural exports. An analysis shows that adopting a worldwide standard of a toxin affecting nuts and grains could increase trade in these commodities by $38 billion compaired with levels under today's widely divergent national standards.
