We argue that since there are several impediments to international risk sharing, the welfare gains from full international risk sharing, which have been the object of analysis in the previous literature, are not suggestive. Instead, we study the gains from feasible risk sharing and find that...

We argue that since there are several impediments to international risk sharing, the welfare fains from full international risk sharing, which have been the object of analysis in the previous literature, are not suggestive. Instead, we study the gains from feasible risk sharing and find that...

The literature has documented an international risk sharing puzzle: there seem to be substantial unexploited gains from international risk sharing. In this paper we analyze the relative contributions of the intertemporal and the cross-sectional smoothing channel to this puzzle. We find that the...