Growth and Risk
How exposure to risk affects economic growth is a key issue in development. This article quantifies both the ex ante and ex post effects of risk using long-running panel data for rural households in Zimbabwe. It proposes a simulation-based econometric methodology to estimate the structural form of a...
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World Bank
2012
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| Online Access: | http://hdl.handle.net/10986/4444 |
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okr-10986-44442021-04-23T14:02:17Z Growth and Risk Elbers, Chris Gunning, Jan Willem Kinsey, Bill attrition business cycles economic decisions economic growth SOCIAL SCIENCES :: Business and economics :: Economics employment income insurance landless laborers productivity How exposure to risk affects economic growth is a key issue in development. This article quantifies both the ex ante and ex post effects of risk using long-running panel data for rural households in Zimbabwe. It proposes a simulation-based econometric methodology to estimate the structural form of a micro model of household investment decisions under risk. The key finding is that risk substantially reduces growth in this particular setting: the mean capital stock in the sample is (in expectation) 46 percent lower than in the absence of risk. About two-thirds of the impact of risk is due to the ex ante effect (that is, the behavioral response to risk), which is usually not taken into account in policy design. These results suggest that policy interventions that reduce exposure to shocks or that help households manage risk could be much more effective than is commonly thought. 2012-03-30T07:12:35Z 2012-03-30T07:12:35Z 2007-01-30 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/4444 CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank World Bank Journal Article Zimbabwe |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| topic |
attrition business cycles economic decisions economic growth SOCIAL SCIENCES :: Business and economics :: Economics employment income insurance landless laborers productivity |
| spellingShingle |
attrition business cycles economic decisions economic growth SOCIAL SCIENCES :: Business and economics :: Economics employment income insurance landless laborers productivity Elbers, Chris Gunning, Jan Willem Kinsey, Bill Growth and Risk |
| geographic_facet |
Zimbabwe |
| description |
How exposure to risk affects economic growth is a key issue in development. This article quantifies both the ex ante and ex post effects of risk using long-running panel data for rural households in Zimbabwe. It proposes a simulation-based econometric methodology to estimate the structural form of a micro model of household investment decisions under risk. The key finding is that risk substantially reduces growth in this particular setting: the mean capital stock in the sample is (in expectation) 46 percent lower than in the absence of risk. About two-thirds of the impact of risk is due to the ex ante effect (that is, the behavioral response to risk), which is usually not taken into account in policy design. These results suggest that policy interventions that reduce exposure to shocks or that help households manage risk could be much more effective than is commonly thought. |
| format |
Journal Article |
| author |
Elbers, Chris Gunning, Jan Willem Kinsey, Bill |
| author_facet |
Elbers, Chris Gunning, Jan Willem Kinsey, Bill |
| author_sort |
Elbers, Chris |
| title |
Growth and Risk |
| title_short |
Growth and Risk |
| title_full |
Growth and Risk |
| title_fullStr |
Growth and Risk |
| title_full_unstemmed |
Growth and Risk |
| title_sort |
growth and risk |
| publisher |
World Bank |
| publishDate |
2012 |
| url |
http://hdl.handle.net/10986/4444 |
| _version_ |
1764391396740956160 |