In theory, one of the main benefits of financial globalization is that it should allow for more efficient international … risk sharing. In this paper, we provide a comprehensive empirical evaluation of the patterns of risk sharing among … different groups of countries and examine how international financial integration has affected the evolution of risk sharing …

We show that international consumption risk sharing is significantly improved by capital flows, especially portfolio … investment. Concomitantly, we show that poor institutions hamper risk sharing, but to an extent that decreases with openness. In … particular, risk sharing ist prevalent even among economies with poor institutions, provided they are open to international …