G2TT
来源类型Discussion paper
规范类型论文
来源IDDP4196
DP4196 Will China's WTO Accession Worsen Rural Poverty?
Kym Anderson; Elena Ianchovichina; Jikun Huang
发表日期2004-01-23
出版年2004
语种英语
摘要This Paper analyses dynamic equilibrium risk sharing contracts between profit-maximizing intermediaries and a large pool of ex-ante identical agents that face idiosyncratic income uncertainty that makes them heterogeneous ex-post. In any given period, after having observed their income, the agent can walk away from the contract, while the intermediary cannot, i.e. there is one-sided commitment. We consider the extreme scenario that the agents face no costs to walking away, and can sign up with any competing intermediary without any reputational losses. Contrary to intuition, we demonstrate that not only autarky, but also partial and full insurance can obtain, depending on the relative patience of agents and financial intermediaries. Insurance can be provided because in an equilibrium contract an up-front payment effectively locks in the agent with an intermediary. We then show that our contract economy is equivalent to a consumption-savings economy with one-period Arrow securities and a short-sale constraint, similar to Bulow and Rogo (1989). From this equivalence and our characterization of dynamic contracts it immediately follows that without cost of switching financial intermediaries debt contracts are not sustainable, even though a risk allocation superior to autarky can be achieved.
主题Financial Economics ; International Macroeconomics
关键词Long-term contracts Risk sharing Limited commitment Competition
URLhttps://cepr.org/publications/dp4196
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/533164
推荐引用方式
GB/T 7714
Kym Anderson,Elena Ianchovichina,Jikun Huang. DP4196 Will China's WTO Accession Worsen Rural Poverty?. 2004.
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