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Risk Sharing and Growth in the Gifts Economy

Author

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  • Atsue Mizushima

    (Graduate School of Economics, Osaka University)

  • Keiichi Koda

    (International Graduate School of Social Science Graduate School of Economics, Yokohama National University)

Abstract

We consider a two-period overlapping generations model where agents face the uncertainty of intergenerational transfers from their children. To avoid this kind of risk, agents have an incentive to share the risk within the same generation. However, there exists an information asymmetry about the realization of the old period fs income between the insurance company and old agents. By analyzing economies with and without risk sharing, we find that risk sharing decreases the rate of economic growth and accelerates social welfare when the rate of social time preference is sufficiently large.

Suggested Citation

  • Atsue Mizushima & Keiichi Koda, 2007. "Risk Sharing and Growth in the Gifts Economy," Discussion Papers in Economics and Business 07-02, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:0702
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    References listed on IDEAS

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    More about this item

    Keywords

    gifts economy; risk sharing; information asymmetry; economic growth; overlapping generations;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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