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Informal insurance, public transfers and consumption smoothing


  • Dercon, Stefan


  • Pramila Krishnan

    (Jesus College)


In developing countries, public programs in the form of food aid distribution are often meant to protect vulnerable households from consumption downturns by providing a safety net. Few studies have evaluated the impact of these programs. Furthermore, households often use a variety of informal mechanisms to cope with risk. We look into the extent to which food aid helps to smooth consumption by reducing the impact of negative shocks, controlling for program placement effects and informal risk-sharing. Using panel data from Ethiopia, we find that despite poor targeting, the programs reduce some of the vulnerability to common shocks via intra-village risk sharing.

Suggested Citation

  • Dercon, Stefan & Pramila Krishnan, 2002. "Informal insurance, public transfers and consumption smoothing," Royal Economic Society Annual Conference 2002 60, Royal Economic Society.
  • Handle: RePEc:ecj:ac2002:60

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    Cited by:

    1. Barrett, Christopher B. & Holden, Stein & Clay, Daniel C., 2002. "Can Food-for-Work Programmes Reduce Vulnerability?," WIDER Working Paper Series 024, World Institute for Development Economic Research (UNU-WIDER).
    2. Rashid, Shahidur, 2011. "Intercommodity price transmission and food price policies: An analysis of Ethiopian cereal markets," IFPRI discussion papers 1079, International Food Policy Research Institute (IFPRI).

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