Consumption Risk-Sharing in China

This paper empirically examines the degree of regional consumption risk-sharing in China. It finds that less risk-sharing is taking place across Chinese provinces than across US states and Canadian provinces, although its extent across the latter is somewhat higher than across the national boundarie...

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Bibliographic Details
Published inEconomica (London) Vol. 75; no. 298; pp. 326 - 341
Main Author XU, XINPENG
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.05.2008
London School of Economics and Political Science
Subjects
Aggregate income
China
Coefficients
Consumer economics
Consumer information
Consumption
Consumption theories
Correlations
Countries
Household consumption
Households
Income estimates
International comparisons
Macroeconomics
Random walk
Regional disparities
Risk sharing
Studies
Willingness to pay
Canada
United States > US
China
China, People's Rep
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Summary:This paper empirically examines the degree of regional consumption risk-sharing in China. It finds that less risk-sharing is taking place across Chinese provinces than across US states and Canadian provinces, although its extent across the latter is somewhat higher than across the national boundaries of industrial countries. Specifically, about half of the fitted annual variation in provincial consumption growth is common to all Chinese provinces, compared with more than two-thirds (less than one-third) in the case of US states and Canadian provinces (G-7 countries). My estimates reveal that Chinese households would be willing to pay dearly to insure their consumption against idiosyncratic shocks.
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ISSN:0013-0427
1468-0335
DOI:10.1111/j.1468-0335.2007.00606.x