George J. Mailath and Larry Samuelson
- Published in print:
- 2006
- Published Online:
- January 2007
- ISBN:
- 9780195300796
- eISBN:
- 9780199783700
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195300796.003.0011
- Subject:
- Economics and Finance, Behavioural Economics
This chapter illustrates how the theory of repeated games with imperfect public monitoring can be used in economic applications. It examines collusion in oligopoly with imperfectly monitored demand, ...
More
This chapter illustrates how the theory of repeated games with imperfect public monitoring can be used in economic applications. It examines collusion in oligopoly with imperfectly monitored demand, oligopoly games with privately observed costs and hence adverse selection, risk sharing and insurance, and repeated principal-agent problems. The latter example also illustrates review strategies.Less
This chapter illustrates how the theory of repeated games with imperfect public monitoring can be used in economic applications. It examines collusion in oligopoly with imperfectly monitored demand, oligopoly games with privately observed costs and hence adverse selection, risk sharing and insurance, and repeated principal-agent problems. The latter example also illustrates review strategies.
George J. Mailath and Larry Samuelson
- Published in print:
- 2006
- Published Online:
- January 2007
- ISBN:
- 9780195300796
- eISBN:
- 9780199783700
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195300796.003.0006
- Subject:
- Economics and Finance, Behavioural Economics
This chapter illustrates how the theory of repeated games with perfect monitoring can be used in economic applications. It examines collusion and price wars in oligopolistic industries subject to ...
More
This chapter illustrates how the theory of repeated games with perfect monitoring can be used in economic applications. It examines collusion and price wars in oligopolistic industries subject to demand shocks, government policy and time consistency, and endogenous risk sharing (e.g., insurance).Less
This chapter illustrates how the theory of repeated games with perfect monitoring can be used in economic applications. It examines collusion and price wars in oligopolistic industries subject to demand shocks, government policy and time consistency, and endogenous risk sharing (e.g., insurance).
Nirvikar Singh
- Published in print:
- 1991
- Published Online:
- November 2003
- ISBN:
- 9780198287629
- eISBN:
- 9780191595912
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198287623.003.0003
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Surveys the theoretical literature on the rationale of sharecropping, with special emphasis on the roles of risk‐sharing, incentive provision, wealth constraints, and screening in an environment of ...
More
Surveys the theoretical literature on the rationale of sharecropping, with special emphasis on the roles of risk‐sharing, incentive provision, wealth constraints, and screening in an environment of pervasive uncertainty, and information asymmetry.Less
Surveys the theoretical literature on the rationale of sharecropping, with special emphasis on the roles of risk‐sharing, incentive provision, wealth constraints, and screening in an environment of pervasive uncertainty, and information asymmetry.
David M. Newbery
- Published in print:
- 1991
- Published Online:
- November 2003
- ISBN:
- 9780198287629
- eISBN:
- 9780191595912
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198287623.003.0014
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Gives an overview of the institutional implications of the economic theory of risk and associated market failures.
Gives an overview of the institutional implications of the economic theory of risk and associated market failures.
Ethan Ligon
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199276837
- eISBN:
- 9780191601620
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199276838.003.0010
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter provides a cardinal measure of risk consistent with the ordinal notion of risk developed by Rothschild and Stiglitz (1970). It presents a simple method for decomposing this measure of ...
More
This chapter provides a cardinal measure of risk consistent with the ordinal notion of risk developed by Rothschild and Stiglitz (1970). It presents a simple method for decomposing this measure of risk into risks due to aggregate shocks, observable idiosyncratic shocks, and unobservable shocks. It develops an estimator for risk-sharing regressions. The techniques are applied to analyse data from the Indian ICRISAT (International Crops Research Institute for the Semi-Arid Tropics) village studies. It is shown that Aurepalle has the best intra-village insurance, but the least access to mechanisms for smoothing aggregate consumption.Less
This chapter provides a cardinal measure of risk consistent with the ordinal notion of risk developed by Rothschild and Stiglitz (1970). It presents a simple method for decomposing this measure of risk into risks due to aggregate shocks, observable idiosyncratic shocks, and unobservable shocks. It develops an estimator for risk-sharing regressions. The techniques are applied to analyse data from the Indian ICRISAT (International Crops Research Institute for the Semi-Arid Tropics) village studies. It is shown that Aurepalle has the best intra-village insurance, but the least access to mechanisms for smoothing aggregate consumption.
Soyoung Kim, Jong‐Wha Lee, and Kwanho Shin
- Published in print:
- 2008
- Published Online:
- May 2008
- ISBN:
- 9780199235889
- eISBN:
- 9780191717109
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199235889.003.0007
- Subject:
- Economics and Finance, South and East Asia
This chapter assesses the progress of regional and global financial integration in East Asia. The chapter is organized as follows. Section 7.2 analyzes the data on geographical distribution of ...
More
This chapter assesses the progress of regional and global financial integration in East Asia. The chapter is organized as follows. Section 7.2 analyzes the data on geographical distribution of international portfolio assets and bank claims for East Asia compared to that for Europe, in order to judge the degree of regional and global asset diversification of East Asia. A gravity model of bilateral financial asset holdings is adopted to formally test if East Asian financial markets are relatively less integrated within the region than in global markets, particularly compared with ones in Europe. Section 7.3 introduces the empirical framework on consumption risk-sharing, and estimates the degree of regional and global consumption risk-sharing for East Asia and Europe. Section 7.4 discusses several hypotheses for the low degree of regional financial integration in East Asia.Less
This chapter assesses the progress of regional and global financial integration in East Asia. The chapter is organized as follows. Section 7.2 analyzes the data on geographical distribution of international portfolio assets and bank claims for East Asia compared to that for Europe, in order to judge the degree of regional and global asset diversification of East Asia. A gravity model of bilateral financial asset holdings is adopted to formally test if East Asian financial markets are relatively less integrated within the region than in global markets, particularly compared with ones in Europe. Section 7.3 introduces the empirical framework on consumption risk-sharing, and estimates the degree of regional and global consumption risk-sharing for East Asia and Europe. Section 7.4 discusses several hypotheses for the low degree of regional financial integration in East Asia.
Stefan Dercon and Pramila Krishnan
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199276837
- eISBN:
- 9780191601620
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199276838.003.0015
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Food aid distribution in rural Ethiopia was investigated to determine allocation rules and the impact of aid on household consumption. The targeting of food aid was sensitive to income within ...
More
Food aid distribution in rural Ethiopia was investigated to determine allocation rules and the impact of aid on household consumption. The targeting of food aid was sensitive to income within villages. Within village-sharing of food aid was observed, which affected consumption. Informal risk-sharing resulted in better outcomes of the food aid distribution scheme.Less
Food aid distribution in rural Ethiopia was investigated to determine allocation rules and the impact of aid on household consumption. The targeting of food aid was sensitive to income within villages. Within village-sharing of food aid was observed, which affected consumption. Informal risk-sharing resulted in better outcomes of the food aid distribution scheme.
Jonathan Morduch
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199276837
- eISBN:
- 9780191601620
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199276838.003.0003
- Subject:
- Economics and Finance, Development, Growth, and Environmental
The risk-sharing and insurance strategies used by rural households to smooth consumption are investigated, using data from the ICRISAT (International Crops Research Institute for the Semi-Arid ...
More
The risk-sharing and insurance strategies used by rural households to smooth consumption are investigated, using data from the ICRISAT (International Crops Research Institute for the Semi-Arid Tropics) Village Level Studies. Self-insurance is the most important risk coping mechanism. Limits in self-insurance and high costs of risk-coping strategies suggest opportunities for institutions that can help households save, work, and accumulate buffer stock to cope with risk.Less
The risk-sharing and insurance strategies used by rural households to smooth consumption are investigated, using data from the ICRISAT (International Crops Research Institute for the Semi-Arid Tropics) Village Level Studies. Self-insurance is the most important risk coping mechanism. Limits in self-insurance and high costs of risk-coping strategies suggest opportunities for institutions that can help households save, work, and accumulate buffer stock to cope with risk.
Robert J. Shiller
- Published in print:
- 2006
- Published Online:
- October 2011
- ISBN:
- 9780195179972
- eISBN:
- 9780199850709
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195179972.003.0006
- Subject:
- Economics and Finance, International
This chapter proposes a system for providing substantial foreign aid to countries that have suffered most in their economic progress. It considers how risk-sharing agreements between governments ...
More
This chapter proposes a system for providing substantial foreign aid to countries that have suffered most in their economic progress. It considers how risk-sharing agreements between governments could better manage national risk and describes how the same objective could be achieved by relying on private actors and decentralized markets. It details the steps and processes involved in developing a national risk management system and evaluates the role of macro markets in managing public finance risks.Less
This chapter proposes a system for providing substantial foreign aid to countries that have suffered most in their economic progress. It considers how risk-sharing agreements between governments could better manage national risk and describes how the same objective could be achieved by relying on private actors and decentralized markets. It details the steps and processes involved in developing a national risk management system and evaluates the role of macro markets in managing public finance risks.
Stefan Dercon (ed.)
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199276837
- eISBN:
- 9780191601620
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199276838.001.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This book presents research on the relationship between risk and poverty in developing countries. It explores risks and shocks affecting the poor, the risk-coping mechanisms they use, the measurement ...
More
This book presents research on the relationship between risk and poverty in developing countries. It explores risks and shocks affecting the poor, the risk-coping mechanisms they use, the measurement of vulnerability to poverty, and policy implications. The book is divided into seven parts. Part I discusses risk-sharing strategies. Parts II and III examine the links between risk and poverty. Part IV provides frameworks for measuring vulnerability to poverty. Part V and VI deal with the role of social institutions. Part VII presents options for protecting the poor. Part VIII discusses role of public in insuring against poverty.Less
This book presents research on the relationship between risk and poverty in developing countries. It explores risks and shocks affecting the poor, the risk-coping mechanisms they use, the measurement of vulnerability to poverty, and policy implications. The book is divided into seven parts. Part I discusses risk-sharing strategies. Parts II and III examine the links between risk and poverty. Part IV provides frameworks for measuring vulnerability to poverty. Part V and VI deal with the role of social institutions. Part VII presents options for protecting the poor. Part VIII discusses role of public in insuring against poverty.
Mauricio Drelichman and Hans-Joachim Voth
- Published in print:
- 2014
- Published Online:
- October 2017
- ISBN:
- 9780691151496
- eISBN:
- 9781400848430
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691151496.003.0008
- Subject:
- Economics and Finance, Economic History
This chapter analyzes the role of contingent scenarios and nature of the defaults. Over the last 800 years, many periods of debt accumulation have been followed by default. Despite these disruptions, ...
More
This chapter analyzes the role of contingent scenarios and nature of the defaults. Over the last 800 years, many periods of debt accumulation have been followed by default. Despite these disruptions, the market for sovereign debt did not disappear. At least, in the case of asiento lending to Philip II, excusable defaults were an important factor. Studying the loan documents directly, the chapter shows that a significant share of short-term loans contained contingency clauses. It then explores the different types of loan modifications along with their impact on cash flows and loan maturity. These modifications allowed effective risk sharing between king and bankers—an institutional solution that offered many of the desirable properties that contingent debt would have today.Less
This chapter analyzes the role of contingent scenarios and nature of the defaults. Over the last 800 years, many periods of debt accumulation have been followed by default. Despite these disruptions, the market for sovereign debt did not disappear. At least, in the case of asiento lending to Philip II, excusable defaults were an important factor. Studying the loan documents directly, the chapter shows that a significant share of short-term loans contained contingency clauses. It then explores the different types of loan modifications along with their impact on cash flows and loan maturity. These modifications allowed effective risk sharing between king and bankers—an institutional solution that offered many of the desirable properties that contingent debt would have today.
Peter A. Diamond
- Published in print:
- 2002
- Published Online:
- October 2011
- ISBN:
- 9780199247899
- eISBN:
- 9780191697692
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199247899.003.0004
- Subject:
- Economics and Finance, Financial Economics, Public and Welfare
This chapter discusses the impact of social security on the capital market particularly on aggregate capital stock and in allocating risks. There are two important elements in adapting to ...
More
This chapter discusses the impact of social security on the capital market particularly on aggregate capital stock and in allocating risks. There are two important elements in adapting to uncertainties in social security. First are the rules that allocate social security risks to different individuals and the second is the possibility of new legislation. Risk sharing has four important aspects. The first one relates to the risks inherent in annuities. The second is the risky rate of return on assets. Thirdly is the risk to cohort wide earnings. Finally the fourth aspect is the risk from the political process. Social security plays a very important role in maintaining economic equilibrium. Putting more focus on the role of social security is the first step to arriving at better economic policies.Less
This chapter discusses the impact of social security on the capital market particularly on aggregate capital stock and in allocating risks. There are two important elements in adapting to uncertainties in social security. First are the rules that allocate social security risks to different individuals and the second is the possibility of new legislation. Risk sharing has four important aspects. The first one relates to the risks inherent in annuities. The second is the risky rate of return on assets. Thirdly is the risk to cohort wide earnings. Finally the fourth aspect is the risk from the political process. Social security plays a very important role in maintaining economic equilibrium. Putting more focus on the role of social security is the first step to arriving at better economic policies.
Peer Hull Kristensen
- Published in print:
- 2011
- Published Online:
- May 2011
- ISBN:
- 9780199594535
- eISBN:
- 9780191724909
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199594535.003.0006
- Subject:
- Business and Management, Political Economy
This chapter summarizes what characterizes an enabling welfare state, identifies its core institutions and how it makes possible distinctive business strategies based on highly autonomous forms of ...
More
This chapter summarizes what characterizes an enabling welfare state, identifies its core institutions and how it makes possible distinctive business strategies based on highly autonomous forms of work organization. Then it interprets this institutional formation as an alternative risk-sharing system to that of the Anglo-Saxon model. While the latter is based on markets and financialization/securitization the Nordic one allows for different actors and modes of search for future comparative advantages and positions in the international innovation system. The comparative differences, advantages, and weaknesses of the Nordic countries are highlighted, and what they can learn from each other to gain more comprehensiveness. Finally the chapter indicates what will be important issues if the enabling welfare state and its experimentalist economy are to be cultivated in a much more deliberative way in the future.Less
This chapter summarizes what characterizes an enabling welfare state, identifies its core institutions and how it makes possible distinctive business strategies based on highly autonomous forms of work organization. Then it interprets this institutional formation as an alternative risk-sharing system to that of the Anglo-Saxon model. While the latter is based on markets and financialization/securitization the Nordic one allows for different actors and modes of search for future comparative advantages and positions in the international innovation system. The comparative differences, advantages, and weaknesses of the Nordic countries are highlighted, and what they can learn from each other to gain more comprehensiveness. Finally the chapter indicates what will be important issues if the enabling welfare state and its experimentalist economy are to be cultivated in a much more deliberative way in the future.
Nicholas Barr and Peter Diamond
- Published in print:
- 2008
- Published Online:
- September 2009
- ISBN:
- 9780195311303
- eISBN:
- 9780199893461
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195311303.003.0007
- Subject:
- Economics and Finance, Financial Economics
Pension systems have powerful redistributive effects, which may or may not be intended and may or may not be desirable. They can redistribute within a generation. Pension systems can also ...
More
Pension systems have powerful redistributive effects, which may or may not be intended and may or may not be desirable. They can redistribute within a generation. Pension systems can also redistribute across generations. A system with less than full funding inescapably makes choices about redistribution across generations; so does a move toward funding that increases national saving. All pension systems face risk. A central question, discussed in the latter part of the chapter, is how these risks can be shared and how widely they should be shared—questions with implications for both efficiency and equity.Less
Pension systems have powerful redistributive effects, which may or may not be intended and may or may not be desirable. They can redistribute within a generation. Pension systems can also redistribute across generations. A system with less than full funding inescapably makes choices about redistribution across generations; so does a move toward funding that increases national saving. All pension systems face risk. A central question, discussed in the latter part of the chapter, is how these risks can be shared and how widely they should be shared—questions with implications for both efficiency and equity.
Robert J. Shiller
- Published in print:
- 1998
- Published Online:
- November 2003
- ISBN:
- 9780198294184
- eISBN:
- 9780191596926
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198294182.001.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
This book, which is part of the distinguished Clarendon Lectures in Economics series, puts forward a unique and authoritative set of detailed proposals for establishing new markets for the management ...
More
This book, which is part of the distinguished Clarendon Lectures in Economics series, puts forward a unique and authoritative set of detailed proposals for establishing new markets for the management of the biggest economic risks facing governments and society. Robert Shiller argues that we have largely the wrong financial markets, and that establishing new ones may fundamentally alter and diminish international economic fluctuations (and thus enable better risk management) and reduce the inequality of incomes. Shiller argues that although some risks, such as natural disaster or temporary unemployment, are shared by society, most risks are borne by the individual, and standards of living are determined by luck. He investigates whether a new technology of markets could make risk sharing possible and shows how new contracts could be designed to hedge all manner of risks to the individual's living standards. He proposes new international markets for perpetual claims on national incomes, and on components and aggregates of national incomes, concluding that these markets may well dwarf our stock markets in their activity and significance. He also argues for new liquid international markets for residential and commercial property. Establishing such unprecedented new markets presents some important technical problems that Shiller attempts to solve with proposals for implementing futures markets on perpetual claims on incomes, and for the construction of index numbers for cash settlement of risk management contracts. These new markets could fundamentally alter and diminish international economic fluctuations, and reduce the inequality of incomes around the world. Much of the book is technical, and it is intended mostly for economists, contract designers at futures and options exchanges, originators of swaps and other financial deals, and designers of retail products associated with risk management (such as insurance, pension plans, and mortgages). However, the material within the book is mostly arranged so that a non‐technical reader can follow the broad themes, and until Ch. 6, most of the technical material is relegated to appendices.Less
This book, which is part of the distinguished Clarendon Lectures in Economics series, puts forward a unique and authoritative set of detailed proposals for establishing new markets for the management of the biggest economic risks facing governments and society. Robert Shiller argues that we have largely the wrong financial markets, and that establishing new ones may fundamentally alter and diminish international economic fluctuations (and thus enable better risk management) and reduce the inequality of incomes. Shiller argues that although some risks, such as natural disaster or temporary unemployment, are shared by society, most risks are borne by the individual, and standards of living are determined by luck. He investigates whether a new technology of markets could make risk sharing possible and shows how new contracts could be designed to hedge all manner of risks to the individual's living standards. He proposes new international markets for perpetual claims on national incomes, and on components and aggregates of national incomes, concluding that these markets may well dwarf our stock markets in their activity and significance. He also argues for new liquid international markets for residential and commercial property. Establishing such unprecedented new markets presents some important technical problems that Shiller attempts to solve with proposals for implementing futures markets on perpetual claims on incomes, and for the construction of index numbers for cash settlement of risk management contracts. These new markets could fundamentally alter and diminish international economic fluctuations, and reduce the inequality of incomes around the world. Much of the book is technical, and it is intended mostly for economists, contract designers at futures and options exchanges, originators of swaps and other financial deals, and designers of retail products associated with risk management (such as insurance, pension plans, and mortgages). However, the material within the book is mostly arranged so that a non‐technical reader can follow the broad themes, and until Ch. 6, most of the technical material is relegated to appendices.
Pranab Bardhan and Christopher Udry
- Published in print:
- 1999
- Published Online:
- November 2003
- ISBN:
- 9780198773719
- eISBN:
- 9780191595929
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198773714.003.0008
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter first characterizes Pareto‐efficient allocation of risk within a community. A discussion of the documented existence of ex post insurance mechanisms within communities in less developed ...
More
This chapter first characterizes Pareto‐efficient allocation of risk within a community. A discussion of the documented existence of ex post insurance mechanisms within communities in less developed countries, and of quantitative studies of community‐level risk‐sharing follows. Next, the theory, including the permanent income hypothesis, and the empirics of consumption‐smoothing over time through savings and credit are studied. The two complementary mechanisms of consumption‐smoothing over time and full cross‐sectional insurance are then compared, followed by the result that if either mechanism exists and is efficient, household production is separable from preferences. In the absence of an ex post insurance mechanism, households may employ ex ante strategies of reducing income fluctuation such as choosing conservative production activities.Less
This chapter first characterizes Pareto‐efficient allocation of risk within a community. A discussion of the documented existence of ex post insurance mechanisms within communities in less developed countries, and of quantitative studies of community‐level risk‐sharing follows. Next, the theory, including the permanent income hypothesis, and the empirics of consumption‐smoothing over time through savings and credit are studied. The two complementary mechanisms of consumption‐smoothing over time and full cross‐sectional insurance are then compared, followed by the result that if either mechanism exists and is efficient, household production is separable from preferences. In the absence of an ex post insurance mechanism, households may employ ex ante strategies of reducing income fluctuation such as choosing conservative production activities.
Joachim De Weerdt
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199276837
- eISBN:
- 9780191601620
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199276838.003.0011
- Subject:
- Economics and Finance, Development, Growth, and Environmental
A method is developed for analysing the determinants of network formation. The unit of analysis will be the dyad, a pair of households. Application of the method to data on a small Haya village in ...
More
A method is developed for analysing the determinants of network formation. The unit of analysis will be the dyad, a pair of households. Application of the method to data on a small Haya village in rural Tanzania showed that the formation of risk-sharing networks was influenced by kinship, geographical proximity, the number of common friends, clan membership, religious affiliation, and wealth.Less
A method is developed for analysing the determinants of network formation. The unit of analysis will be the dyad, a pair of households. Application of the method to data on a small Haya village in rural Tanzania showed that the formation of risk-sharing networks was influenced by kinship, geographical proximity, the number of common friends, clan membership, religious affiliation, and wealth.
Clive Bell and T. N. Srinivasan
- Published in print:
- 1991
- Published Online:
- November 2003
- ISBN:
- 9780198287629
- eISBN:
- 9780191595912
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198287623.003.0011
- Subject:
- Economics and Finance, Development, Growth, and Environmental
The authors explore, in a principal‐agent model of interlinking of production credit and crop marketing, the terms of equilibrium contracts under risk neutrality; in particular, they examine the ...
More
The authors explore, in a principal‐agent model of interlinking of production credit and crop marketing, the terms of equilibrium contracts under risk neutrality; in particular, they examine the situation in which one of the two relevant instruments—the rate of commission on crop sale and the rate of interest on credit—is redundant.Less
The authors explore, in a principal‐agent model of interlinking of production credit and crop marketing, the terms of equilibrium contracts under risk neutrality; in particular, they examine the situation in which one of the two relevant instruments—the rate of commission on crop sale and the rate of interest on credit—is redundant.
Angus Deaton
- Published in print:
- 1992
- Published Online:
- November 2003
- ISBN:
- 9780198288244
- eISBN:
- 9780191596131
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198288247.003.0005
- Subject:
- Economics and Finance, Macro- and Monetary Economics
Reviews the large econometric literature that uses micro data to test the theory of intertemporal allocations and finds it inconclusive. The empirical work that is reviewed focuses on the permanent ...
More
Reviews the large econometric literature that uses micro data to test the theory of intertemporal allocations and finds it inconclusive. The empirical work that is reviewed focuses on the permanent income hypothesis, excess sensitivity, and measurement error. It argues that short panels are not well suited to testing the key theoretical predictions. The chapter concludes by reviewing evidence that looks for the presence of altruism and risk sharing between households and evaluates the extent to which consumption patterns move together.Less
Reviews the large econometric literature that uses micro data to test the theory of intertemporal allocations and finds it inconclusive. The empirical work that is reviewed focuses on the permanent income hypothesis, excess sensitivity, and measurement error. It argues that short panels are not well suited to testing the key theoretical predictions. The chapter concludes by reviewing evidence that looks for the presence of altruism and risk sharing between households and evaluates the extent to which consumption patterns move together.
Daromir Rudnyckyj
- Published in print:
- 2018
- Published Online:
- May 2019
- ISBN:
- 9780226551920
- eISBN:
- 9780226552118
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226552118.003.0008
- Subject:
- Anthropology, Social and Cultural Anthropology
This chapter addresses the question of what kind of alternative Islamic finance offers to its conventional counterpart. The chapter compares what experts called "debt based" Islamic finance with the ...
More
This chapter addresses the question of what kind of alternative Islamic finance offers to its conventional counterpart. The chapter compares what experts called "debt based" Islamic finance with the version they referred to as "equity based." It argues that equity-based Islamic finance, which entails investment and profit- and risk-sharing, offered a distinct alternative to conventional finance because it put inherent limits on leveraging. The chapter documents how officials at Malaysia's Central Bank sought to encourage risk- and profit-sharing contracts and some of the technical problems experts had to overcome as they sought to replace debt-based devices with those based on equity instead.Less
This chapter addresses the question of what kind of alternative Islamic finance offers to its conventional counterpart. The chapter compares what experts called "debt based" Islamic finance with the version they referred to as "equity based." It argues that equity-based Islamic finance, which entails investment and profit- and risk-sharing, offered a distinct alternative to conventional finance because it put inherent limits on leveraging. The chapter documents how officials at Malaysia's Central Bank sought to encourage risk- and profit-sharing contracts and some of the technical problems experts had to overcome as they sought to replace debt-based devices with those based on equity instead.
