Risk-Sharing and Growth: The Role of Precautionary Savings in the "Education" Model
While the "risk amelioration" literature suggests that risk-sharing channels savings into risky but productive technologies and hence favours growth, models focused on precautionary savings reverse this conclusion. We solve, by means of numerical techniques, a model based on human capital accumulation through education, and find that the increase in precautionary savings makes labour more productive in the goods sector and draws resources from education, which is the "growth leading" activity. Hence, we establish a result favourable to financial integration, even in a model where precautionary savings play an important role. Copyright 2001 by The editors of the Scandinavian Journal of Economics.
Volume (Year): 103 (2001)
Issue (Month): 1 (March)
|Contact details of provider:|| Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0347-0520|
When requesting a correction, please mention this item's handle: RePEc:bla:scandj:v:103:y:2001:i:1:p:63-77. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.