10 Apr
2025
Kiel-CEPR Research Seminar
How Good is International Risk Sharing?
13:00
–
14:00
Dmitry Mukhin, London School of Economics and Political Science (LSE)
Anmeldung
Speaker: Dmitry Mukhin, London School of Economics and Political Science (LSE)
Location: online or at Kiel Institute for the World Economy, Kiellinie 66, 24105 Kiel
Organizers: Kiel Institute for the World Economy, CEPR
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Abstract: How efficient is international risk sharing? Using a conventional open-economy framework, this paper derives a new sufficient statistic that can answer this question. Our approach does not require estimating any structural parameters and can be easily implemented using macro and trade data available for a large panel of countries over several decades. In contrast to the existing methods that focus on comovement of consumption across countries and the Backus-Smith correlation, our statistic is robust to both trade frictions and financial shocks. We also argue that the non-fundamental noise in the exchange rate does not necessarily compromise the quality of international risk sharing and show how a fundamental level of the exchange rate can be recovered from the data.
Helene Schüle
helene.schuele@ifw-kiel.de
David Kläffling
david.klaeffling@ifw-kiel.de
