Risk Sharing_Final.pdf (1.75 MB)
Self-Production, Friction, and Risk Sharing against Disasters: Evidence from a Developing Country
journal contribution
posted on 2017-01-20, 11:30 authored by Yasuyuki Sawada, Hiroyuki Nakata, Tomoaki KoteraThis paper uses a unique household data set collected in Vietnam to empirically test the necessary
conditions for an extended version of the consumption risk-sharing hypothesis. The test explicitly
incorporates self-production and uses natural disasters such as avian influenza, droughts, and floods
to identify the effectiveness of market and non-market risk-sharing mechanisms. With these
additional treatments, full risk sharing cannot be rejected, which suggests the presence of omitted
variable and endogeneity biases in existing studies that reject full risk sharing. We also find that
credit constraints have a significant impact, although limited commitment is not necessarily serious.
Funding
This paper was written as part of a research project under the Research Institute of Economy, Trade and Industry (RIETI). We acknowledge financial support from RIETI.
History
Citation
World Development, 2017, 94, pp. 27–37Author affiliation
/Organisation/COLLEGE OF SOCIAL SCIENCES, ARTS AND HUMANITIES/School of ManagementVersion
- AM (Accepted Manuscript)