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Incomplete Intertemporal Consumption Smoothing and Incomplete Risksharing

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  • Pierfederico Asdrubali

    (John Cabot University)

  • Soyoung Kim

    ()
    (Department of Economics, Korea University)

Abstract

This paper develops a method to estimate jointly the degree of intertemporal consumption smoothing and the degree of ¡±interregional¡± risksharing. The empirical results for the US states and OECD and EU countries suggest that: 1) regardless of the assumption on the degree of intertemporal consumption smoothing, the degree of risksharing within a country is larger than across countries; 2) the degree of intertemporal consumption smoothing within a country is also larger than across countries; 3) The difference between the degree of intertemporal consumption smoothing within US states and across OECD and EU countries is as large as the difference between the degree of risksharing, contrary to the findings of some past studies.

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Bibliographic Info

Paper provided by Institute of Economic Research, Korea University in its series Discussion Paper Series with number 0725.

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Length: 28 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:iek:wpaper:0725

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Keywords: intertemporal consumption smoothing; risksharing; channels of risksharing; international vs. intranational;

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References

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  1. Sorensen, B-E & Yosha, O, 1996. "International Risk Sharing and European Monetary Unification," Papers 40-96, Tel Aviv.
  2. Marianne Baxter, 1995. "International Trade and Business Cycles," NBER Working Papers 5025, National Bureau of Economic Research, Inc.
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  7. Pierfederico Asdrubali & Soyoung Kim, 2007. "On The Empirics Of International Smoothing," Discussion Paper Series 0724, Institute of Economic Research, Korea University.
  8. Jacques Mélitz & Frédéric Zumer, 1999. "Interregional and International Risk Sharing and Lessons for EMU," Sciences Po publications n°2154, Sciences Po.
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Citations

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Cited by:
  1. Asdrubali, Pierfederico & Kim, Soyoung, 2009. "Consumption smoothing channels in open economies," Journal of Banking & Finance, Elsevier, vol. 33(12), pages 2293-2300, December.
  2. Alessandro Federici & Pierluigi Montalbano, 2012. "Macroeconomic volatility, consumption behaviour and welfare: A cross-country analysis," Working Paper Series 3612, Department of Economics, University of Sussex.
  3. Hevia, Constantino & Serven, Luis, 2013. "Partial consumption insurance and financial openness across the world," Policy Research Working Paper Series 6479, The World Bank.
  4. Andrea Colciago & Tiziano Ropele & V. Anton Muscatelli & Patrizio Tirelli, 2008. "The Role of Fiscal Policy in a Monetary Union: are National Automatic Stabilizers Effective?," Review of International Economics, Wiley Blackwell, vol. 16(3), pages 591-610, 08.
  5. Alun H. Thomas & Tamim Bayoumi, 2009. "Today Versus tomorrow," IMF Working Papers 09/248, International Monetary Fund.
  6. Kurosaki, Takashi, 2011. "Vulnerability of Household Consumption to Village-level Aggregate Shocks in a Developing Country," PRIMCED Discussion Paper Series 8, Institute of Economic Research, Hitotsubashi University.

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