Consumption, Stock Returns, and the Gains from International Risk-Sharing.

The structure of this paper is as follows. in section 1, I describe the welfare gain function. In section 2, I use stock returns for the G-7 countries to examine stock returns using standard mean- variance analysis. In section 3, I develop a single general equilibrium framework for examining risk-sharing based upon consumption. I then incorporate stock return data to calculate general equilibrium gains in section 4. In section 5, I use the expected stock returns to back out the implied utility parameters. With these values, I re-examine the welfare costs. Concluding remarks follow.