Incomplete market participation, endogenous endowment risks and welfare |
| |
Authors: | Hiroaki Ohno |
| |
Affiliation: | aGraduate School of Economics, Osaka University, 1-7, Machikaneyama-machi, Toyonaka, Osaka 560-0043, Japan |
| |
Abstract: | This paper investigates the equilibrium growth rate of capital stock and social welfare when risk-sharing externalities are incorporated into the infinite-horizon model where endowment risks are endogenized by the degree of incomplete market participation. There exist Nash equilibria depending on the degree of market participation. Under equilibrium with incomplete market participation, the endowment risks cannot be fully diversified as they induce precautionary savings and the over-accumulation of capital stocks while spillover effects on production technologies lead to the under-accumulation of capital stocks. This may have desirable effects on economic growth and improve social welfare. |
| |
Keywords: | Risk-sharing externalities Incomplete market participation Endogenous growth Welfare analysis |
本文献已被 ScienceDirect 等数据库收录! |
|