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Has Consumption Risk Sharing Increased in Asia (and Elsewhere)?
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- Authors
- Issue Date
- 2011-10
- Citation
- Seoul Journal of Economics, Vol.24 No.4, pp. 551-574
- Keywords
- Consumption risk sharing ; International and regional business cycles ; Asian financial crisis ; Financial globalization ; Emerging markets
- Abstract
- What impact has financial globalization had on risk sharing? In
theory, financial globalization should improve international consumption
risk sharing. While the answer to this question is of utmost policymaking
concern, results in the empirical literature are inconclusive.
The paper surveys the extant literature and tries to identify
which factors influence the answer: i) consumption risk sharing seems
to have increased among industrialized countries but much less in
the emerging world. ii) The increase in risk sharing is generally found
to be stronger in studies that focus on the trends rather than purely
cyclical variation in the data. iii) globalization has not only affected
consumption responses to output shocks but also the structure of
these shocks themselves. This, in turn, has affected the measurement
of risk sharing. The paper examines the relevance of these points
on a sample of East Asian Economies. My results indicate that
risk sharing in East Asia has started to increase once the region had
recovered from the Asian crisis.
- ISSN
- 1225-0279
- Language
- English
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