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Consumption Smoothing Across States and Time: International Insurance vs. Foreign Loans

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  • von Furstenberg, George M.

Abstract

When countries, and macroeconomic models, open up to international capital markets, the welfare gains available through completion of financial markets for contingencies potentially are much greater than those available from access to noncontingent international borrowing. Intercasual insurance, reducing exposure to differences in contingent future cases, and not intertemporal smoothing between now and then is the big story in open economies although the two must be told together.

Suggested Citation

  • von Furstenberg, George M., 2004. "Consumption Smoothing Across States and Time: International Insurance vs. Foreign Loans," Discussion Paper Series 1: Economic Studies 2004,13, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdp1:2158
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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