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on Insurance Economics |
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Issue of 2010‒06‒26
four papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | MArcelo de Paiva Abreu (Department of Economics PUC-Rio); Felipe Tamega Fernandes (Harvard Business School) |
| Abstract: | This paper surveys the formation and development of insurance business in Brazil. It describes its very first steps, from the colonial times and imperial era to recent events. Particular attention is given to regulatory changes, showing how they evolved in response to macroeconomic shocks that affected the Brazilian economy during this period. |
| Keywords: | Insurance, Brazil, Regulation. JEL Code: G22, G38, L50, N46. |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:rio:texdis:572&r=ias |
| By: | Basu, Parantap; Semenov, Andrei; Wada, Kenji |
| Abstract: | Following Kocherlakota and Pistaferri (2009), we consider two forms of incomplete risk sharing in economies with consumer heterogeneity: (a) where agents are unable to insure their consumption against idiosyncratic skill shocks and (b) where idiosyncratic shocks to skills can be partially insured by striking long term insurance contract with truth revelation constraint. When considering the equity premium, currency premium, risk-free rate, and consumption-real exchange rate puzzles in an integrated framework, we find empirical evidence that although the pricing kernel associated with (a) outperforms the complete risk-sharing stochastic discount factor and the pricing kernel associated with (b), it is still unable to jointly resolve these asset-pricing anomalies. |
| Keywords: | Currency Premium; Equity Premium; Exchange Rate. |
| JEL: | F30 G00 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23351&r=ias |
| By: | John C. Ham; I. Serkan Ozbeklik; Lara Shore-Sheppard |
| Abstract: | Economists have devoted considerable resources to estimating local average treatment effects of expansions in Medicaid eligibility for children. In this paper we use random coefficients linear probability models and switching probit models to estimate a more complete range of effects of Medicaid expansion on Medicaid take-up and crowd-out of private insurance. We demonstrate how to estimate, for Medicaid expansions, the average effect among all of those eligible, the average effect for a randomly chosen person, the effect for a marginally eligible child, and the average effect for those affected by a nonmarginal counterfactual policy change. We then estimate the average effect of Medicaid expansions among all eligible children and the average effect for those affected by a nonmarginal counterfactual Medicaid expansion since these are likely to be the most useful for policy analysis. Estimated take-up rates among average eligible children are substantially larger than take-up rates for those made eligible by a counterfactual Medicaid expansion, moreover both of these effects vary widely across demographic groups. In terms of crowd-out, we find statistically significant, though small, effects for all eligible children, but not for those affected by a counterfactual policy change. |
| JEL: | H42 I1 I38 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16112&r=ias |
| By: | Ojo, Marianne |
| Abstract: | Through a focus on the ever increasing need to address information asymmetries, as well as reference to the uniqueness of the degree to which systemic risks are triggered in banking, this paper aims primarily to highlight reasons why government and central bank intervention are essential and required in financial regulation. The role presently assumed by regulation is not the same as it was thirty years ago. Deregulation and conglomeration have significantly altered the landscape in which regulation previously existed and to an extent, defined the role which it presently assumes. For this reason, arguments which were (and have been) directed against government, central bank intervention, as well as the role of regulation, require re-evaluation. Deposit insurance and lender of last resort arrangements serve to instil confidence in depositors hence contributing towards safeguarding system stability and preventing unnecessary runs where panics occur. Such benefits are not only considered against those arguments advanced by antagonists of deposit insurance and lender of last resort arrangements, but also against those views which do not favour government and central bank intervention. In evaluating whether free banking is equipped with as many mechanisms and safeguards required in safeguarding the stability of the financial system, the urgency for such safety net instruments, which is attributed to the peculiar and unique nature of banking, will be considered. Contrary to the argument [that “if markets are generally better at allocating resources than governments are, then the differences or distinctions which exist between “money” and the industry that provides it (the banking industry) should not serve as bases for an assumption that money and banking are exceptions to the general rule”], it has to be highlighted (for several reasons) that the banking industry could not be equated to other areas of the financial sector. One of such reasons relates to the extent to which the impact of systemic runs differ within the banking sector when compared to other areas such as the securities markets. The differences in the nature of risks which exist in banking and those which exist within the securities markets, constitutes another reason why the need for government and central bank intervention is advocated. Furthermore, even though the nature of banking risks warrants government and central bank intervention – as well as capital adequacy regulation, capital regulation should also be extended to the securities markets for many reasons – one of which is the ability to securitise assets. If there was no longer a role for regulation, then re- regulation should not have occurred in certain jurisdictions which have adopted and successfully implemented consolidated supervision. |
| Keywords: | asymmetric information; lender of last resort; central banks; systemic; regulation; deposit insurance; free banking |
| JEL: | E0 K2 E5 D8 |
| Date: | 2010–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23298&r=ias |