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Finance and Financial Management
Risk-Sharing, Income Shocks, Financial Innovation, Welfare, Portfolio Choice
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Incomplete Markets And Financial Innovation: Consequences For Risk-Sharing, Household Welfare, And Portfolio Choice, Nicolas Duvernois
Incomplete Markets And Financial Innovation: Consequences For Risk-Sharing, Household Welfare, And Portfolio Choice, Nicolas Duvernois
University of New Orleans Theses and Dissertations
The dissertation consists of three chapters measuring the degree of risk-sharing in a panel of US households, and its impact on welfare and portfolio choice. Conventional wisdom suggests financial innovation improves risk-sharing by completing markets and lowering transaction costs--households engage in risk-sharing to insure against idiosyncratic income shocks to improve their own welfare. In the first chapter, using household level income and imputed consumption data, I find that households' ability to smooth permanent shocks has slightly increased while transitory insurance remained unchanged. However, I find that participating households have higher consumption insurance. Their ability to insure permanent shocks has improved …