Output Smoothing in EMU and OECD: Can We Forego Government Contribution? A Risk Sharing Approach

Carlos Marinheiro ()

No 1051, CESifo Working Paper Series from CESifo

Abstract: This paper analyses the smoothing of asymmetric shocks to output for a sample of OECD countries. It also examines whether the private capital markets will be able to replace the government in providing output smoothing in the euro-area, in the near future. The research finds no evidence of large differences in the patterns of risk sharing for the 19 OECD countries, the EU-15 or euro-area countries, for the period 1970-1999. However, there were shown to be considerable differences between the euro-area and the successful monetary union of the USA: the euro-area showed a much lower insurance of asymmetric shocks than the US states. Until increasing economic integration in Europe does not lead to a substantial decrease in the incidence of idiosyncratic shocks, such shocks may impose non-negligible welfare costs.

Keywords: EMU; output smoothing; risk sharing; international capital markets; economic integration (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-ifn and nep-reg
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Citations: View citations in EconPapers (7)

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Working Paper: Output Smoothing in EMU and OECD: Can We Forego Government Contribution? A risk sharing approach (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1051

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