On the role of market insurance in a dynamic model
AbstractDurables like cars or houses are a substantial component in the balance sheets of households. These durables are exposed to risk and can be insured in the market. We build a dynamic model in which agents have three possibilities to cope with the risk exposure of the durable stock: (i) purchase of market insurance, (ii) buffer-stock saving of the riskless asset or (iii) adjustment of the durable stock. We calibrate our model to the US economy and find a small role for market insurance. Copyright The Geneva Association 2007
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Bibliographic InfoArticle provided by Springer in its journal THE GENEVA RISK AND INSURANCE REVIEW.
Volume (Year): 32 (2007)
Issue (Month): 1 (June)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=102897
Consumption; Durables; Uncertainty; Insurance; Buffer-stock wealth; D81; E21; G22;
Other versions of this item:
- Helge Braun & Winfried Koeniger, 2007. "On the role of market insurance in a dynamic model," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 32(1), pages 61-90, June.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
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