nep-ias New Economics Papers
on Insurance Economics
Issue of 2014‒10‒13
seven papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Farm-level choice of crop insurance coverage level: A preliminary assessment By Johansson, Rob; Worth, Tom; Cooper, Joe
  2. The Republic of Kazakhstan: Financial System Stability Assessment By International Monetary Fund. Middle East and Central Asia Dept.
  3. U.S. Cotton Acreage Response to Subsidized Crop Insurance, 1995 to 2011 By Tronstad, Russell; Emerick, Ma. Romilee; Sall, Ibrahima
  4. Is Government Involvement Really Necessary: Implications for Systemic Risk and Crop Reinsurance Contracts By Feng, Xiaoguang; Hayes, Dermot
  5. How do countries measure, manage, and monitor fiscal risks generated by public-private partnerships? Chile, Peru, South Africa, Turkey By Aslan, Cigdem; Duarte, David
  6. The Resolving of the Entrance-Waiting for the Facilities Service and the Influence of the Facilities-Function-Differentiation(in Japanese) By Yoshimi ADACHI; Nobuo AKAI; Toshio UEMATSU
  7. A General and Intuitive Envelope Theorem. By Andrew Clausen (The University of Edinburgh); Carlo Strub (University of St. Gallen)

  1. By: Johansson, Rob; Worth, Tom; Cooper, Joe
    Abstract: The response of farmers to crop insurance incentives has been studied extensively. In particular, studies following the landmark ARPA legislation in 2000 have taken a close look at farmer participation changed with changes in the insurance subsidies. However, few if any studies have looked at the extent of farmer participation as measured in terms of their choice of coverage levels. This analysis uses farm-level observations of crop insurance choices to examine how changes to premium rates and subsidies may affect farmer choice of insurance coverage levels. Specifically we examine farmer choices of from a set of discrete coverage levels to changes in insurance premium subsidies that occurred in 2008 and 2009 while accounting for farm characteristics and market conditions. Some portion of the farmer choice of coverage levels were due to policy choices in the 2008 Farm Bill, whereas others were a result of significant price or other market changes between 2008 and 2009.
    Keywords: Agricultural and Food Policy, Production Economics, Risk and Uncertainty,
    Date: 2014–10
  2. By: International Monetary Fund. Middle East and Central Asia Dept.
    Keywords: Financial system stability assessment;Financial sector;Financial safety nets;Liquidity management;Bank resolution;Bank supervision;Insurance supervision;Securities regulations;Capital markets;Risk management;Economic indicators;Reports on the Observance of Standards and Codes;Kazakhstan;
    Date: 2014–08–29
  3. By: Tronstad, Russell; Emerick, Ma. Romilee; Sall, Ibrahima
    Keywords: simultaneous, panel, fixed effects, subsidy per pound, rate of return, Agricultural and Food Policy, Crop Production/Industries, Q11, Q18,
    Date: 2014
  4. By: Feng, Xiaoguang; Hayes, Dermot
    Keywords: Crop insurance, reinsurance, systemic risk, copula, Bayesian, Agribusiness, Agricultural Finance, Research Methods/ Statistical Methods, Risk and Uncertainty,
    Date: 2014
  5. By: Aslan, Cigdem; Duarte, David
    Abstract: The topic of managing fiscal risks arising from public-private partnerships is receiving increased attention as more governments turn toward this type of financing for large infrastructure projects. Governments can manage balance sheet exposure to public-private partnerships by quantifying and capturing direct obligations and provisions for potential calls on government guarantees associated with public-private partnership projects in the preparation of the medium term fiscal framework and annual budget. This working paper examines how four countries with active public-private partnership projects manage the costs and risks of financial obligations generated by these investments throughout the lifetime of the contracts. The paper seeks to complement the existing literature with a practitioner's point of view while exploring if and how these countries monitor and evaluate the fiscal risks generated by the portfolio of public-private partnerships (as well as individual projects). The countries covered are Chile, Peru, South Africa, and Turkey, all of which have experience implementing public-private partnership projects. The research finds that countries have tailored fiscal risk management and monitoring frameworks to fit their circumstances and respective budgeting, accounting, and reporting practices. All four countries assess the overall or partial credit exposure to monitor and manage their fiscal commitments from public-private partnerships in a consolidated way. All countries have developed evaluation models to help assess fiscal risks and assess project and portfolio level credit exposure. Further scrutiny could be focused on budgeting and accounting practices, which could be strengthened and brought in line with international standards. Similarly, sharing and standardizing information would improve transparency and accountability.
    Keywords: Debt Markets,Bankruptcy and Resolution of Financial Distress,Public Sector Economics,Access to Finance,Insurance&Risk Mitigation
    Date: 2014–09–01
  6. By: Yoshimi ADACHI; Nobuo AKAI; Toshio UEMATSU
    Abstract: The long-term care facility service cost suddenly increases since the start of the nursing-care insurance system and will be increasing with the advancing aging in future. The cared periods are prolonged as the average life span of the elderly person lengthens. The family function is weakening as the nuclear family being in progress and the single or two household increases. From these, in addition to the financial problem, it should be examined the restraint of the nursing-care cost considering the care burden for the households. This paper examined two points. First, assuming the current system, the model of the long-term care facility service cost is built according to the age-grade, the need of nursing- care-degree and nursing-care-service per one elderly person. Secondly, using this model, it is examined how the cost of the long-term care facility service, especially the intensive-care old people's home, is restrained, Specifically, with the waiting entrance data of the intensive-care old people's home, this paper calculates the amount of change of the cost of the long-term care facility service, in cases of meeting all the demand of the waiting entrance and of limiting the part demand. Additional calculations also consider that the reduction for the medical expenses occurs with the transfer from the medical facilities to the nursing facilities. As a result, the followings are shown; firstly it is effective that an elderly person who needs intensive nursing care could be entered preferentially giving a constant limit to the slight need of nursing care degree for facilities service. Secondly, it is for the medical care treatment expenses to be restrained by differentiating appropriately the facilities service between the medical facilities and the nursing facilities.
    Date: 2013–06
  7. By: Andrew Clausen (The University of Edinburgh); Carlo Strub (University of St. Gallen)
    Abstract: We present an envelope theorem for establishing first-order conditions in decision problems involving continuous and discrete choices. Our theorem accommodates general dynamic programming problems, even with unbounded marginal utilities. And, unlike classical envelope theorems that focus only on differentiating value functions, we accommodate other endogenous functions such as default probabilities and interest rates. Our main technical ingredient is how we establish the differentiability of a function at a point: we sandwich the function between two differentiable functions from above and below. Our theory is widely applicable. In unsecured credit models, neither interest rates nor continuation values are globally differentiable. Nevertheless, we establish an Euler equation involving marginal prices and values. In adjustment cost models, we show that first-order conditions apply universally, even if optimal policies are not (S,s). Finally, we incorporate indivisible choices into a classic dynamic insurance analysis.
    Keywords: First-order conditions, discrete choice, unsecured credit, adjustment costs, informal insurance arrangements.
    Date: 2014–09–22

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