Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2003-09-11
Number: 03-070/2
Author-Name: Chris Elbers
Author-Email: celbers@feweb.vu.nl
Author-Workplace-Name: Faculty of Economics and Business Administration, Vrije Universiteit
Author-Name: Jan Willem Gunning
Author-Email: jgunning@feweb.vu.nl
Author-Workplace-Name: Faculty of Economics and Business Administration, Vrije Universiteit
Title: Vulnerability in a Stochastic Dynamic Model
Abstract: Most measures of vulnerability are a-theoretic and essentially static. In this paper we use a stochastic Ramsey model to find a household's optimal welfare and we measure vulnerability as the shortfall from the welfare attained if the household consumed permanently at the poverty line. The results indicate that vulnerability is very sensitive to the time horizon considered. We find that the accuracy of existing regression-based vulnerability measures can be greatly improved by including asset measures in the regression.
Classification-JEL: D12; D60; D91; O12
Keywords: vulnerability; expected poverty; risk; Ramsey model; consumption regressions
File-Url: https://papers.tinbergen.nl/03070.pdf
File-Format: application/pdf
File-Size: 461875 bytes
Handle: RePEc:tin:wpaper:20030070