IDEAS home Printed from https://ideas.repec.org/p/ags/huaewp/232808.html
   My bibliography  Save this paper

Consumption Smoothing in Village Economies: Intra-Temporal Versus Inter-Temporal Smoothing Mechanisms

Author

Listed:
  • Seiler, Edward J.

Abstract

This study examines the role of the various mechanisms that are employed to smooth consumption in village economies in less developed countries. Since intra-temporal remittances are only capable of smoothing the idiosyncratic component of risk, we include inter-temporal smoothing mechanisms into our analysis that are capable of smoothing the aggregate risk component. We develop a theoretical framework for our analysis that integrates two central strands of the village economy literature, risk sharing and buffer-stock saving. Using this framework we ask if transfers are targeted to liquidity constrained households, and we examine the relative use of the two types of mechanism by adding transaction costs in the use of intra-temporal remittances. We also analyze the relationship between remittances, household income and asset holdings using simulated data generated from the mode1. Our results suggest that within a risk sharing framework, remittances will be targeted to liquidity constrained households only under certain conditions; that there will be a positive relationship between asset accumulation and remittances; and that household income will be inversely related to remittances.

Suggested Citation

  • Seiler, Edward J., 1998. "Consumption Smoothing in Village Economies: Intra-Temporal Versus Inter-Temporal Smoothing Mechanisms," Working Papers 232808, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
  • Handle: RePEc:ags:huaewp:232808
    DOI: 10.22004/ag.econ.232808
    as

    Download full text from publisher

    File URL: http://ageconsearch.umn.edu/record/232808/files/hebrewuniv-workingpapers-9810.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-546, June.
    2. Youngjae Lim & Robert Townsend, 1998. "General Equilibrium Models of Financial Systems: Theory and Measurement in Village Economies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 59-118, January.
    3. Zeldes, Stephen P, 1989. "Consumption and Liquidity Constraints: An Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 305-346, April.
    4. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    5. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 103-114, Summer.
    6. Hanan G. Jacoby & Emmanuel Skoufias, 1998. "Testing Theories of Consumption Behavior Using Information on Aggregate Shocks: Income Seasonality and Rainfall in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 1-14.
    7. Seiler, Edward J., 1998. "The Use of Remittances and Asset Accumulation in Consumption Smoothing: Evidence from Village India," Working Papers 232810, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
    8. Robert M. Townsend, 1995. "Financial Systems in Northern Thai Villages," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1011-1046.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Seiler, Edward J., 1998. "The Use of Remittances and Asset Accumulation in Consumption Smoothing: Evidence from Village India," Working Papers 232810, Hebrew University of Jerusalem, Center for Agricultural Economic Research.

    More about this item

    Keywords

    International Development;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:huaewp:232808. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/caehuil.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.