A provincial view of consumption risk sharing: Asset classes as shock absorbers

Victor Pontines

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: Using a unique data set on provincial net factor income flows disaggregated across the three asset classes of debt, equity and FDI reinvested earnings in Korea, we investigated how these asset channels impacted consumption risk sharing during the Global Financial Crisis and the European sovereign debt crisis. Adopting spatial panel methods, this study found that net receipts of debt, equity and FDI retained earnings have all contributed favorably to consumption risk sharing during these crises episodes, with FDI retained earnings robustly positive in its contribution in buffering shocks to consumption. We also found suggestive evidence that net equity receipts rather than net debt receipts contributed more to risk sharing during these episodes. Overall, our results indicate that different asset channels can provide the insurance needed to cushion the economy against adverse shocks.

Keywords: Consumption risk sharing; Consumption smoothing; Factor income flows; Spatial panel (search for similar items in EconPapers)
JEL-codes: E25 F36 G11 R12 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2019-03
New Economics Papers: this item is included in nep-geo, nep-mac and nep-opm
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: A Provincial View of Consumption Risk Sharing: Asset Classes as Shock Absorbers (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2019-23

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