Vulnerability in a Stochastic Dynamic Model
AbstractMost measures of vulnerability are a-theoretic and essentially static. In this paper we use a stochastic Ramsey model to find a household's optimal welfare and we measure vulnerability as the shortfall from the welfare attained if the household consumed permanently at the poverty line. The results indicate that vulnerability is very sensitive to the time horizon considered. We find that the accuracy of existing regression-based vulnerability measures can be greatly improved by including asset measures in the regression.
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Bibliographic InfoPaper provided by EconWPA in its series Development and Comp Systems with number 0409003.
Length: 30 pages
Date of creation: 08 Sep 2004
Date of revision:
Note: Type of Document - pdf; pages: 30
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vulnerability; expected poverty; risk; Ramsey model; consumption regressions;
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This paper has been announced in the following NEP Reports:
- NEP-DGE-2004-09-12 (Dynamic General Equilibrium)
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