Study Findings from HEC Paris Provide New Insights into European Economies (Endogenous Partial Insurance and Inequality)

2021 FEB 23 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Current study results on European Economies have been published. According to news originating from Paris, France, by NewsRx correspondents, research stated, “In this paper, we propose a model of endogenous partial insurance and we investigate its implications for macroeconomic outcomes, such as wealth inequality, asset accumulation, interest rate, and consumption smoothing. To this end, we include participation costs to state-contingent asset markets into an otherwise standard Aiyagari (1994) model.”

Financial support for this research came from French National Research Agency (ANR).

Our news journalists obtained a quote from the research from HEC Paris, “We highlight the resulting nonmonotonic relationship between wealth and insurance-market participation when insurance is costly. Poor households remain uninsured, middle-class households participate in the insurance market, whereas rich households decide to self-insure by only purchasing risk-free assets.”

According to the news editors, the research concluded: “After theoretically characterizing the endogenous partial insurance equilibrium, we quantify its effect, emphasizing the roles of a participation channel and an interest rate channel.”

This research has been peer-reviewed.

For more information on this research see: Endogenous Partial Insurance and Inequality. Journal of the European Economic Association, 2020;18(5):2270-2314. Journal of the European Economic Association can be contacted at: Oxford University Press, Great Clarendon St, Oxford OX2 6DP, England. (Wiley-Blackwell - http://www.wiley.com/; Journal of the European Economic Association - http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1542-4774)

The news correspondents report that additional information may be obtained from Eric Mengus, HEC Paris, Paris, France.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/jeea/jvz034. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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