The impact of the belt and road initiative on international consumption risk sharing: A difference-in-differences analysis

This study investigates the impact of the Belt and Road Initiative (BRI) on consumption risk sharing among participating countries. Utilizing a difference-in-differences model within the context of international consumption risk sharing, we analyze data from 2002 to 2022 for 64 BRI countries. Our empirical findings indicate a significant reduction in consumption risk sharing attributable to the BRI. Further subgroup analysis reveals that the BRI hinders consumption risk sharing particularly among countries along the Land Silk Road, especially those bordering China. Key contributing factors include increased tariffs, heightened foreign investment, rising employment rates, increased resident income, and a diversified range of consumer products. These factors exacerbate the BRI's adverse effects on consumption risk sharing in comparison to countries with lower levels of these variables. Our findings suggest that the Initiative has an uneven impact on the mechanisms affecting countries along its route.