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Home | News | Paper by Christian Stoltenberg and alumnus Swapnil Singh appeared in Quantitive Economics
News | June 08, 2020

Paper by Christian Stoltenberg and alumnus Swapnil Singh appeared in Quantitive Economics

The paper ‘Consumption Insurance with Advance Information' by fellow Christian Stoltenberg (University of Amsterdam) and alumnus Swapnil Singh (Bank of Lithuania) has been published in Quantitative Economics (May 2020).

Paper by Christian Stoltenberg and alumnus Swapnil Singh appeared in Quantitive Economics
Abstract

This paper investigates whether assuming that households possess advance information on their income shocks helps to overcome the difficulty of standard models to understand consumption insurance in the US. As our main result, we find that the quantitative relevance of advance information crucially depends on the structure of insurance markets. For a realistic amount of advance information, a complete markets model with endogenous solvency constraints due to limited commitment explains several key consumption insurance measures better than existing models without advance information. In contrast, when advance information is integrated into a standard incomplete markets model, it affects household consumption‐saving decisions too little to bridge the gap between the model and the data and can induce counterfactual correlations between current consumption growth and future income growth.

Article Citation:

Christian Stoltenberg and Swapnil Singh, “Consumption insurance with advance information”, Quantitative Economics. Volume 11, Issue 2, May 2020, pp. 671–711. doi.org/10.3982/QE1169