English, Article, Journal or magazine article edition: Explaning the Correlation Between Output and Volatility in a Model of International Risk-Sharing and Limited Commitment Pietro Reichlin

User activity

Share to:
 
Bookmark: http://trove.nla.gov.au/version/56296
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Explaning the Correlation Between Output and Volatility in a Model of International Risk-Sharing and Limited Commitment
Author
  • Pietro Reichlin
Physical Description
  • preprint
Notes
  • I study the constrained efficient allocations of a simple model of risk sharing and capital flows across countries assuming that each country cannot commit to fully repay its contract obligations. In the model, the degree of risk sharing and the amount of investment are interdependent. It is shown that, when individual rationality constraints are binding, the variance of consumption in any given country across states of nature (iid across countries) may be a non monotonic function of income: low in the early stage of development, high in an intermediate range and converging to zero as income converges to a high income level. A monotonically decreasing consumption variance can only obtain if the social welfare function assigns equal weights to all countries (equal treatment). The model also shows that a structure of competitive financial markets with appropriate borrowing constraints may not be sufficient to decentralize the constrained efficient allocation. A supernational authority forcing a specific redistribution of income within poorly capitalized countries may be necessary for decentralization.
  • Risk Sharing, Volatility, Limited commitment
  • RePEc:red:sed006:251
Language
  • English
Contributed by
OAIster

Get this edition

Other links

  • Set up My libraries

    How do I set up "My libraries"?

    In order to set up a list of libraries that you have access to, you must first login or sign up. Then set up a personal list of libraries from your profile page by clicking on your user name at the top right of any screen.

  • All (1)
  • Unknown (1)
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.

User activity


e.g. test cricket, Perth (WA), "Parkes, Henry"

Separate different tags with a comma. To include a comma in your tag, surround the tag with double quotes.

Be the first to add a tag for this edition

Be the first to add this to a list

Comments and reviews

What are comments? Add a comment

No user comments or reviews for this version

Add a comment