Vulnerability in a Stochastic Dynamic Model

Research output: Working paperProfessional

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.
Original languageEnglish
Place of PublicationAmsterdam
PublisherTinbergen Instituut
Publication statusPublished - 2003

Publication series

NameDiscussion paper TI
No.03-070/2

Fingerprint

Vulnerability
Stochastic dynamics
Household
Time horizon
Assets
Ramsey model
Poverty line

Cite this

Elbers, C., & Gunning, J. W. (2003). Vulnerability in a Stochastic Dynamic Model. (Discussion paper TI; No. 03-070/2). Amsterdam: Tinbergen Instituut.
Elbers, Chris ; Gunning, Jan Willem. / Vulnerability in a Stochastic Dynamic Model. Amsterdam : Tinbergen Instituut, 2003. (Discussion paper TI; 03-070/2).
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Elbers, C & Gunning, JW 2003 'Vulnerability in a Stochastic Dynamic Model' Discussion paper TI, no. 03-070/2, Tinbergen Instituut, Amsterdam.

Vulnerability in a Stochastic Dynamic Model. / Elbers, Chris; Gunning, Jan Willem.

Amsterdam : Tinbergen Instituut, 2003. (Discussion paper TI; No. 03-070/2).

Research output: Working paperProfessional

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AB - 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.

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Elbers C, Gunning JW. Vulnerability in a Stochastic Dynamic Model. Amsterdam: Tinbergen Instituut. 2003. (Discussion paper TI; 03-070/2).