Pooling risk among countries

• 成果类型: Article
• 署名作者: Callen, Michael; Imbs, Jean; Mauro, Paolo
• 署名单位: Harvard University; Centre National de la Recherche Scientifique (CNRS); Paris School of Economics
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2015.01.006
• 发表日期: 2015
• 页码: 88-99
• 关键词: Risk sharing; diversification; Growth-indexation; GDP-indexed instruments

摘要

Suppose that international sharing risk worldwide or with large numbers of countries were costly. How much risk-sharing could be gained in small sets (or pools) of countries? To answer this question, we compute the means and variances of poolwide gross domestic product growth, for all possible pools of any size drawn from a sample of 74 countries, and compare them with the means and variances of consumption growth in each country individually. From the difference, we infer potential diversification and welfare gains. As much as two-thirds of the first best, full worldwide welfare gains can be obtained in groupings of as few as seven countries. The largest potential gains arise from pools consisting of countries in different regions and including countries with weak institutions. We argue that international risk-sharing fails to emerge because the largest potential gains are among countries that do not trust each other's willingness and ability to abide by international contractual obligations. (C) 2015 Elsevier B.V. All rights reserved.