Unlike the traditional measure of welfare gains from risksharing, the new measure presented here does not depend on the horizon, and it is robust to alternative specifications of the consumption stochastic processes and preferences. This measure shows that if international risk-sharing eliminates volatility in aggregate consumption and leads to greater consumption growth, risk-sharing can have a sizable impact on consumer welfare.
Unlike the traditional measure of welfare gains from risksharing, the new measure presented here does not depend on the horizon, and it is robust to alternative specifications of the consumption stochastic processes and preferences. This measure shows that if international risk-sharing eliminates...