Consumption Smoothing Across States and Time: International Insurance vs. Foreign Loans

Deutsche Bundesbank Discussion Paper No. 13/2004

50 Pages Posted: 8 Sep 2004

Multiple version iconThere are 2 versions of this paper

Date Written: 2004

Abstract

When countries, and macroeconomic models, open up to international capital markets, the welfare gains available through completion of financial markets for contingencies potentially are much greater than those available from access to noncontingent international borrowing. Intercasual insurance, reducing exposure to differences in contingent future cases, and not intertemporal smoothing between now and then is the big story in open economies although the two must be told together.

Keywords: Consumption Smoothing, International Economic Insurance, Arrow-Debreu Securities, Foreign Loans, International Risk Sharing

JEL Classification: F36, G22, E21

Suggested Citation

von Furstenberg, George M., Consumption Smoothing Across States and Time: International Insurance vs. Foreign Loans (2004). Deutsche Bundesbank Discussion Paper No. 13/2004. Available at SSRN: https://ssrn.com/abstract=586961 or http://dx.doi.org/10.2139/ssrn.586961

George M. Von Furstenberg (Contact Author)

Indiana University ( email )

Department of Economics
Wylie Hall, Indiana University
Bloomington, IN 47405-6620
United States
812-856-1382 (Phone)
812-855-3736 (Fax)

HOME PAGE: http://mypage.iu.edu/~vonfurst/

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