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Risk Sharing from International Factor Income: Explaining Cross-Country Differences

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Author Info
Vadym Volosovych () (Department of Economics, College of Business, Florida Atlantic University)

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Abstract

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.

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Publisher Info
Paper provided by Department of Economics, College of Business, Florida Atlantic University in its series Working Papers with number 06008.

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Length: 46 pages
Date of creation: Apr 2006
Date of revision: Jan 2009
Handle: RePEc:fal:wpaper:06008

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Related research
Keywords: Financial markets integration; income insurance; risk sharing; investor protection;

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Find related papers by JEL classification:
F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Yuliya Demyanyk & Vadym Volosovych, 2006. "Gains from Financial Integration in the European Union: Evidence for New and Old Members," Working Papers 06009, Department of Economics, College of Business, Florida Atlantic University, revised Aug 2007. [Downloadable!]
    Other versions:
  2. Fratzscher, Marcel & Imbs, Jean, 2007. "Risk Sharing, Finance and Institutions in International Portfolios," CEPR Discussion Papers 6496, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
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