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Growth and risk-sharing with private information

Aubhik Khan () and B Ravikumar

No 99-12, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: The author examines the impact of incomplete risk-sharing on growth and welfare. The source of market incompleteness in the 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. The author finds that incomplete risk-sharing tends to reduce the rate of growth relative to the complete risk-sharing benchmark. Numerical examples indicate that the welfare cost and the growth effect of private information are small.

Keywords: Economic development; Risk (search for similar items in EconPapers)
Date: 1999, Revised 1999
New Economics Papers: this item is included in nep-dev, nep-dge, nep-ias and nep-ino
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Related works:
Journal Article: Growth and risk-sharing with private information (2001) Downloads
Working Paper: Growth and Risk-Sharing with Private Information (1998) Downloads
Working Paper: Growth and Risk-Sharing with Private Information (1997)
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