Consumption insurance pattern differences between China and the US: The role of self- and external insurance

Yulin Liu and Xu Si

Finance Research Letters, 2023, vol. 58, issue PB

Abstract: In this letter, we measure permanent income shocks, transitory income shocks, and consumption changes at the household level to explore the role of self-insurance and external insurance in explaining the different consumption insurance patterns between Chinese households and US households. We find that household assets have larger effects on increasing the household's smoothing of permanent income shocks for Chinese households, while public transfers decrease US households’ sensitivity to transitory income shocks. The role of private transfers is not statistically significant for either US or Chinese households.

Keywords: Consumption insurance; Income shocks; Consumption smoothing (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007560

DOI: 10.1016/j.frl.2023.104384

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