01563cas a2200253 a 4500 AALejournalIMF018291 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484344163 1018-5941 BD-DhAAL BD-DhAAL Ma, Chang. Welfare Gains from Market Insurance : The Case of Mexican Oil Price Risk / Chang Ma, Fabian Valencia. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (39 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Over the past two decades, Mexico has hedged oil price risk through the purchase of put options. We examine the resulting welfare gains using a standard sovereign default model calibrated to Mexican data. We show that hedging increases welfare by reducing income volatility and reducing risk spreads on sovereign debt. We find welfare gains equivalent to a permanent increase in consumption of 0.44 percent with 90 percent of these gains stemming from lower risk spreads. Mode of access: Internet Valencia, Fabian. IMF Working Papers; Working Paper ; No. 2018/035 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/035/001.2018.issue-035-en.xml IMF e-Library