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Risk Sharing and Growth in the Gifts Economy

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Author Info
Atsue Mizushima () (Graduate School of Economics, Osaka University)
Keiichi Koda () (International Graduate School of Social Science Graduate School of Economics, Yokohama National University)

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Abstract

We consider a two-period overlapping generations model where agents face the uncertainty of intergenerational transfers from their children. To avoid this kind of risk, agents have an incentive to share the risk within the same generation. However, there exists an information asymmetry about the realization of the old periodfs income between the insurance company and old agents. By analyzing economies with and without risk sharing, we find that risk sharing decreases the rate of economic growth and accelerates social welfare when the rate of social time preference is sufficiently large.

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Publisher Info
Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 07-02.

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Length: 29 pages
Date of creation: Feb 2007
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Handle: RePEc:osk:wpaper:0702

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Web page: http://www.econ.osaka-u.ac.jp/
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Related research
Keywords: gifts economy risk sharing information asymmetry economic growth overlapping generations

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Find related papers by JEL classification:
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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