Growth and risk-sharing with private information

Aubhik Khan, B. Ravikumar

Research output: Contribution to journalArticle

20 Citations (Scopus)

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 that the welfare cost and the growth effect of private information are small.

Original languageEnglish (US)
Pages (from-to)499-521
Number of pages23
JournalJournal of Monetary Economics
Volume47
Issue number3
DOIs
StatePublished - Jun 2001
Externally publishedYes

Fingerprint

Private information
Risk sharing
Household
Benchmark
Long-term contracts
Intermediaries
Productivity shocks
Welfare cost
Market incompleteness

Keywords

  • E20
  • Growth
  • Long-term contracts
  • O16
  • Risk-sharing

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

Growth and risk-sharing with private information. / Khan, Aubhik; Ravikumar, B.

In: Journal of Monetary Economics, Vol. 47, No. 3, 06.2001, p. 499-521.

Research output: Contribution to journalArticle

Khan, Aubhik ; Ravikumar, B. / Growth and risk-sharing with private information. In: Journal of Monetary Economics. 2001 ; Vol. 47, No. 3. pp. 499-521.
@article{6989c46a80834939bff514358357bc4b,
title = "Growth and risk-sharing with private information",
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 that the welfare cost and the growth effect of private information are small.",
keywords = "E20, Growth, Long-term contracts, O16, Risk-sharing",
author = "Aubhik Khan and B. Ravikumar",
year = "2001",
month = "6",
doi = "10.1016/S0304-3932(01)00053-8",
language = "English (US)",
volume = "47",
pages = "499--521",
journal = "Journal of Monetary Economics",
issn = "0304-3932",
publisher = "Elsevier",
number = "3",

}

TY - JOUR

T1 - Growth and risk-sharing with private information

AU - Khan, Aubhik

AU - Ravikumar, B.

PY - 2001/6

Y1 - 2001/6

N2 - 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 that the welfare cost and the growth effect of private information are small.

AB - 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 that the welfare cost and the growth effect of private information are small.

KW - E20

KW - Growth

KW - Long-term contracts

KW - O16

KW - Risk-sharing

UR - http://www.scopus.com/inward/record.url?scp=0038362924&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=0038362924&partnerID=8YFLogxK

U2 - 10.1016/S0304-3932(01)00053-8

DO - 10.1016/S0304-3932(01)00053-8

M3 - Article

AN - SCOPUS:0038362924

VL - 47

SP - 499

EP - 521

JO - Journal of Monetary Economics

JF - Journal of Monetary Economics

SN - 0304-3932

IS - 3

ER -