Vulnerability in a Stochastic Dynamic Model

Chris Elbers; Jan Willem Gunning

Vulnerability in a Stochastic Dynamic Model

School of Business and Economics

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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 language	English
Place of Publication	Amsterdam
Publisher	Tinbergen Instituut
Publication status	Published - 2003

Publication series

Name	Discussion paper TI
No.	03-070/2

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 1 No Poverty

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Vulnerability in a Stochastic Dynamic Model

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UN SDGs

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