The Feasible Gains from International Risk Sharing PDF Download
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Author: Sylvester C. W. Eijffinger
Publisher:
ISBN:
Category : Country risk
Languages : en
Pages : 36
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Book Description
We argue that since there are several impediments to international risk sharing, the welfare fains from full international risk sharing, which have been the object of analysis in the previous literature, are not suggestive. Instead, we study the gains from feasible risk sharing and find that they are considerable (0,5% increase in permanent consumption). Marginal benefits from further risk sharing are low, which indicates that feasible risk sharing can achieve most of the benefits from international risk sharing. Surprisingly, we find that sharing short term consumption risk lowers welfare. On the basis of the results we make suggestions on how to improve existing international risk sharing systems.
Author: Sylvester C. W. Eijffinger
Publisher:
ISBN:
Category : Country risk
Languages : en
Pages : 36
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Book Description
We argue that since there are several impediments to international risk sharing, the welfare fains from full international risk sharing, which have been the object of analysis in the previous literature, are not suggestive. Instead, we study the gains from feasible risk sharing and find that they are considerable (0,5% increase in permanent consumption). Marginal benefits from further risk sharing are low, which indicates that feasible risk sharing can achieve most of the benefits from international risk sharing. Surprisingly, we find that sharing short term consumption risk lowers welfare. On the basis of the results we make suggestions on how to improve existing international risk sharing systems.
Author: Steven J. Davis
Publisher:
ISBN:
Category : International trade
Languages : en
Pages : 76
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Book Description
This paper develops and implements a framework for quantifying the gains to international trade in risky financial assets. The framework can handle may agents, many assets, incomplete markets and limited participation in asset markets. It delivers closed-form analytic solutions for consumption, portfolio allocations, asset prices and the gains to trade. We find enormous gains to trade when asset returns are calibrated to observed risk premia and all agents participate in asset markets. The gains-to-trade puzzle is closely related to, but distinct from, the equity premium puzzle. High risk aversion merely alters the form of the gains-to-trade puzzle, but limited participation in asset markets goes a long way towards addressing both puzzles. We also identify three reasons for limited international risk sharing. First, the requirement that asset markets span the space of national output shocks fails in a serious way. Second, for many countries the cost of using financial assets to hedge national output shocks greatly exceeds the benefits. Third, limited asset market participation reduces the feasible gains from international risk sharing.
Author: Vadym Volosovych
Publisher:
ISBN:
Category :
Languages : en
Pages : 44
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Book Description
Access to world capital markets and net investment income flows between countries help protect national income from country-specific output shocks. I empirically study what factors explain cross-country differences in the extent of risk sharing from international factor income. An index of investor protection is the leading causal variable for the estimated amount of risk sharing over the 1985-2004 period. Improving investor protection in Russia to Denmark's level implies five times larger risk sharing compared to the sample average. These results indicate one possible way to reap large potential benefits from international risk sharing.
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: Minouche Shafik
Publisher: Princeton University Press
ISBN: 069120764X
Category : Business & Economics
Languages : en
Pages : 256
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Book Description
From one of the leading policy experts of our time, an urgent rethinking of how we can better support each other to thrive Whether we realize it or not, all of us participate in the social contract every day through mutual obligations among our family, community, place of work, and fellow citizens. Caring for others, paying taxes, and benefiting from public services define the social contract that supports and binds us together as a society. Today, however, our social contract has been broken by changing gender roles, technology, new models of work, aging, and the perils of climate change. Minouche Shafik takes us through stages of life we all experience—raising children, getting educated, falling ill, working, growing old—and shows how a reordering of our societies is possible. Drawing on evidence and examples from around the world, she shows how every country can provide citizens with the basics to have a decent life and be able to contribute to society. But we owe each other more than this. A more generous and inclusive society would also share more risks collectively and ask everyone to contribute for as long as they can so that everyone can fulfill their potential. What We Owe Each Other identifies the key elements of a better social contract that recognizes our interdependencies, supports and invests more in each other, and expects more of individuals in return. Powerful, hopeful, and thought-provoking, What We Owe Each Other provides practical solutions to current challenges and demonstrates how we can build a better society—together.
Author: Falko Fecht
Publisher:
ISBN: 9783865584663
Category :
Languages : en
Pages : 0
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Book Description
Author: Truman Packard
Publisher: Human Development Perspectives
ISBN: 9781464814273
Category : Business & Economics
Languages : en
Pages : 0
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Book Description
"This white paper focusses on the policy interventions made to help people manage risk, uncertainty and the losses from events whose impacts are channeled primarily through the labor market. The objectives of the white paper are: to scrutinize the relevance and effects of prevailing risk-sharing policies in low- and middle-income countries; take account of how global drivers of disruption shape and diversify how people work; in light of this diversity, propose alternative risk-sharing policies, or ways to augment and improve current policies to be more relevant and responsive to peoples' needs; and map a reasonable transition path from the current to an alternative policy approach that substantially extends protection to a greater portion of working people and their families. This white paper is a contribution to the broader, global discussion of the changing nature of work and how policy can shape its implications for the wellbeing of people. We use the term risk-sharing policies broadly in reference to the set of institutions, regulations and interventions that societies put in place to help households manage shocks to their livelihoods. These policies include formal rules and structures that regulate market interactions (worker protections and other labor market institutions) that help people pool risks (social assistance and social insurance), to save and insure affordably and effectively (mandatory and incentivized individual savings and other financial instruments) and to recover from losses in the wake of livelihood shocks ('active' reemployment measures). Effective risk-sharing policies are foundational to building equity, resilience and opportunity, the strategic objectives of the World Bank's Social Protection and Jobs Global Practice. Given failures of factor markets and the market for risk in particular the rationale for policy intervention to augment the options that people have to manage shocks to their livelihoods is well-understood and accepted. By helping to prevent vulnerable people from falling into poverty --and people in the poorest households from falling deeper into poverty-- effective risk-sharing interventions dramatically reduce poverty. Households and communities with access to effective risk-sharing instruments can better maintain and continue to invest in these vital assets, first and foremost, their human capital, and in doing so can reduce the likelihood that poverty and vulnerability will be transmitted from one generation to the next. Risk-sharing policies foster enterprise and development by ensuring that people can take appropriate risks required to grasp opportunities and secure their stake in a growing economy."--
Author: Douglas L. Kruse
Publisher: University of Chicago Press
ISBN: 0226056961
Category : Business & Economics
Languages : en
Pages : 433
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Book Description
The historical relationship between capital and labor has evolved in the past few decades. One particularly noteworthy development is the rise of shared capitalism, a system in which workers have become partial owners of their firms and thus, in effect, both employees and stockholders. Profit sharing arrangements and gain-sharing bonuses, which tie compensation directly to a firm’s performance, also reflect this new attitude toward labor. Shared Capitalism at Work analyzes the effects of this trend on workers and firms. The contributors focus on four main areas: the fraction of firms that participate in shared capitalism programs in the United States and abroad, the factors that enable these firms to overcome classic free rider and risk problems, the effect of shared capitalism on firm performance, and the impact of shared capitalism on worker well-being. This volume provides essential studies for understanding the increasingly important role of shared capitalism in the modern workplace.
Author:
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 700
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Book Description
Author: Mr.Yan Carriere-Swallow
Publisher: International Monetary Fund
ISBN: 1513514814
Category : Computers
Languages : en
Pages : 50
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Book Description
This SPR Departmental Paper will provide policymakers with a framework for studying changes to national data policy frameworks.
