Risk Sharing and Growth in the Gifts Economy

Atsue Mizushima () and Keiichi Koda ()
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Keiichi Koda: International Graduate School of Social Science Graduate School of Economics, Yokohama National University

No 07-02, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: We consider a two-period overlapping generations model where agents face the uncertainty of intergenerational transfers from their children. To avoid this kind of risk, agents have an incentive to share the risk within the same generation. However, there exists an information asymmetry about the realization of the old period fs income between the insurance company and old agents. By analyzing economies with and without risk sharing, we find that risk sharing decreases the rate of economic growth and accelerates social welfare when the rate of social time preference is sufficiently large.

Keywords: gifts economy; risk sharing; information asymmetry; economic growth; overlapping generations (search for similar items in EconPapers)
JEL-codes: D81 D82 G22 O40 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2007-02
New Economics Papers: this item is included in nep-dge and nep-ias
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