consumption across countries from the predictions of models with full risk sharing. It is commonly believed that these risk … that the full risk sharing equilibrium may not require much diversification of equity portfolios when there is price …

Though theory suggests financial globalization should improve international risk sharing, empirical support has been … limited. We develop a simple welfare-based measure that captures how far countries are from the ideal of perfect risk sharing …. We then take it to data and find international risk sharing has, indeed, improved during globalization. Improved risk …