Full Insurance in the Presence of Aggregate Uncertainty

摘要: This paper tests implications of full consumption insurance. The object is to determine how much mileage can be obtained from a model with complete markets, such features as private information or liquidity constraints omitted. implication exploited that individual responds aggregate risk but not idiosyncratic risk. test involves regressing the change in household onto and other right-hand-side variables income employment status. All than are predicted insignificant explaining consumption. With observations on for 10,695 households Consumer Expenditure Survey, results mixed. one specification (exponential utility) mostly consistent insurance; (power not.