Growth and Risk-Sharing with Private Information

Aubhik Khan () and B Ravikumar ()

Macroeconomics from EconWPA

Abstract: We examine the impact of incomplete risk-sharing on growth and welfare. The source of market incompleteness in our economy is private information: a household's idiosyncratic productivity shock is not observable by others. Risk-sharing between households occurs through long-term contracts with intermediaries. We find that incomplete risk- sharing tends to reduce the rate of growth relative to the complete risk sharing benchmark. Numerical examples indicate the contracts are relatively efficient and that the growth effects of private information are small.

Keywords: growth; long-term contracts; risk-sharing (search for similar items in EconPapers)
JEL-codes: E (search for similar items in EconPapers)
Date: 1998-02-04
Note: Type of Document - PDF; prepared on Acrobat PDF; pages: 31 ; figures: included
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http://129.3.20.41/eps/mac/papers/9802/9802003.pdf (application/pdf)

Related works:
Working Paper: Growth and Risk-Sharing with Private Information (1997)
Working Paper: Growth and risk-sharing with private information (1999)
Journal Article: Growth and risk-sharing with private information (2001)
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