Vulnerability And Risk Sharing Of Chinese Households: The Risks And Household Behaviors During China*s Rapid Economic Transition

Meng, Xiangyi

ISBN 10: 3659166391 / ISBN 13: 9783659166396

Published by LAP LAMBERT Academic Publishing, 2012

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Bibliographic Details

• Title: Vulnerability And Risk Sharing Of Chinese Households: The Risks And Household Behaviors During China*s Rapid Economic Transition
• Publisher: LAP LAMBERT Academic Publishing
• Publication Date: 2012
• Language: English
• ISBN 10: 3659166391
• ISBN 13: 9783659166396
• Binding: paperback
• Condition: Like New
• Book Type: book

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Synopsis

This book focuses on measuring risk faced by households in the largest developing country—China. First I develop a costly transfer model between distant households and use a data set on rural households to test whether economic distance hinders their ability to share risks among them. I find that economic distance does matter, and that economic distance and income shocks jointly determine the amount of risk sharing between households. Then I develop a new measure of vulnerability, which is designed to be robust to measurement-errors and non-stationary consumption processes. Monte Carlo experiments show that it performs better than other estimators proposed in the literature. Finally I apply this new estimator to urban households to evaluate the welfare consequences of consumption growth, unequal distribution and risks during 2002–2004. I find that unequal distribution causes a large reduction in average household welfare, that aggregate consumption growth will compensate this loss after about 8.5 years, and that risks at different levels of aggregation all significantly reduce households’ welfare, although the impact of risk on welfare is smaller than that of unequal distribution.

About the Author

Xiangyi Meng is an Assistant Professor at the Central University of Finance and Economics (2007-present). He received his B.A. in Economics from Peking University in 1998 and earned his M.S. and Ph.D. in Agricultural Economics at the University of California at Berkeley. His research focuses on issues in economic development and consumer finance.