Risk-Sharing and Growth: The Role of Precautionary Savings in the "Education" Model
AbstractWhile the "risk amelioration" literature suggests that risk-sharing channels savings into risky but productive technologies and hence favours growth, models focused on precautionary savings reverse this conclusion. We solve, by means of numerical techniques, a model based on human capital accumulation through education, and find that the increase in precautionary savings makes labour more productive in the goods sector and draws resources from education, which is the "growth leading" activity. Hence, we establish a result favourable to financial integration, even in a model where precautionary savings play an important role. Copyright 2001 by The editors of the Scandinavian Journal of Economics.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.
Volume (Year): 103 (2001)
Issue (Month): 1 (March)
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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442
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- Johannes Geyer, 2011.
"The Effect of Health and Employment Risks on Precautionary Savings,"
Discussion Papers of DIW Berlin
1167, DIW Berlin, German Institute for Economic Research.
- Johannes Geyer, 2011. "The Effect of Health and Employment Risks on Precautionary Savings," SOEPpapers on Multidisciplinary Panel Data Research 408, DIW Berlin, The German Socio-Economic Panel (SOEP).
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