Vulnerability in a Stochastic Dynamic Model

Chris Elbers and Jan Willem Gunning ()

Development and Comp Systems from EconWPA

Abstract: Most measures of vulnerability are a-theoretic and essentially static. In this paper we use a stochastic Ramsey model to find a household's optimal welfare and we measure vulnerability as the shortfall from the welfare attained if the household consumed permanently at the poverty line. The results indicate that vulnerability is very sensitive to the time horizon considered. We find that the accuracy of existing regression-based vulnerability measures can be greatly improved by including asset measures in the regression.

Keywords: vulnerability; expected poverty; risk; Ramsey model; consumption regressions (search for similar items in EconPapers)
JEL-codes: O P (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: Written 2004-09-08
Note: Type of Document - pdf; pages: 30

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http://129.3.20.41/eps/dev/papers/0409/0409003.pdf (application/pdf)

Related works:
Working Paper: Vulnerability in a Stochastic Dynamic Model (2003)
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