We obtain a recursive formulation for a general class of contracting problems involving
incentive constraints. These constraints make the corresponding maximization (sup) …

This paper shows how two standard models of consumption risk-sharing—self-insurance
through borrowing and saving and limited commitment to insurance contracts—replicate …

When the risk of default constrains financial contracts, public insurance policies can
significantly affect private risk-sharing. This is because by changing income expectations …

When default leads to exclusion from financial markets, the implied loss of consumption
smoothing opportunities is more costly when income volatility is high. A rise in income risk …

This paper shows how the rise in individual income risk in the US since the 1980s might
help explain the fall in its foreign asset position. The key to this result is endogenous …

This paper provides new evidence on consumption risk-sharing in economies with limited
commitment to insurance contracts. Using a simulated method of moments procedure, I …

This paper shows how two standard models of consumption risk-sharing–selfinsurance
through borrowing and saving and limited commitment to insurance contracts–replicate …

We obtain a recursive formulation for a general class of contracting problems involving
incentive constraints. These constraints make the corresponding maximization (sup) …