The Price of Growth: Consumption Insurance in China 1989–2009
- (pp. 1-35)
Abstract
We exploit a novel and unique opportunity to document the transmission of income risk to consumption in a growing economy. Our laboratory is China, an economy that has witnessed enormous and sustained growth. We build a long panel of household-level consumption and income data. We find that consumption insurance deteriorates along the growth process with a transmission of permanent income shocks to consumption that at least triples from 1989 to 2009. Although preliminary, our welfare analysis suggests that the loss of consumption insurance can have first-order implications for the welfare assessment of economic growth.Citation
Santaeulàlia-Llopis, Raül, and Yu Zheng. 2018. "The Price of Growth: Consumption Insurance in China 1989–2009." American Economic Journal: Macroeconomics, 10 (4): 1-35. DOI: 10.1257/mac.20160250Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- E21 Macroeconomics: Consumption; Saving; Wealth
- O12 Microeconomic Analyses of Economic Development
- O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- P24 Socialist Systems and Transitional Economies: National Income, Product, and Expenditure; Money; Inflation
- P25 Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics
- P36 Socialist Institutions and Their Transitions: Consumer Economics; Health; Education and Training: Welfare, Income, Wealth, and Poverty
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