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has been cited by the following article:

• TITLE: Financial Innovation and Aggregate Risk Sharing

  AUTHORS: Rodrigo J. Hernandez, Pu Liu, Yingying Shao

  KEYWORDS: Financial Innovation, Consumption Smoothing, Income Insurance

  JOURNAL NAME: Theoretical Economics Letters, Vol.8 No.11, August 7, 2018

  ABSTRACT: In this paper we examine the impact of financial innovations on real economy. Based on data for US banks’ off-balance sheet activities from 1995 to 2013, we investigate aggregate risk sharing in two different channels: Personal consumption smoothening and personal income insurance. The results show that the use of financial innovations contributes to a reduction in the exposure of personal income and consumption to state-specific economic shocks, and the results suggest a positive role played by financial innovations in real economy.