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Risk‐Sharing, Vulnerability and the Global Financial Crisis
Author(s) -
Miller Stephen Matteo
Publication year - 2014
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/1475-4932.12095
Subject(s) - economics , financial crisis , falling (accident) , vulnerability (computing) , demographic economics , unit (ring theory) , macroeconomics , medicine , computer science , mathematics education , mathematics , computer security , environmental health
Tests using Household, Income and Labour Dynamics in Australia unit record data from 2006–07 to 2010–11 indicate that Australian households on average insure against idiosyncratic income shocks. For a 10 per cent change in income, non‐durable expenditures change by 0.14 per cent, while food expenditures change by 0.05 per cent; both results are statistically insignificant. Non‐durable expenditures respond asymmetrically to positive and negative income shocks, especially during the Global Financial Crisis, rising by 0.1 per cent for a 10 per cent income rise but falling by 0.6 per cent for a 10 per cent income decline in 2009; the latter result is statistically significant. Controlling for risk tolerance heterogeneity yields identical results.