Regional Versus Global Risk Sharing in East Asia^*

This paper estimates the degree of risk sharing for each of 10 East Asian countries with countries in the region and with OECD countries by using cross-country consumption correlations and formal regression analysis. Risk sharing is found to be far from complete and quite low for most of the countries. Taiwan and Singapore have the highest risk sharing. Indonesia and Malaysia have the lowest (and significantly negative) risk sharing. The degree of risk sharing does not increase in most countries over 1970–2000. For the less-developed countries, potential gains from risk sharing would be larger with OECD countries than with East Asian countries.