EconPapers    
Economics at your fingertips  
 

Risk sharing by financial markets in federal systems: What do we really measure?

Sebastian Dullien ()

No 02-2017, FMM Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: This paper criticises the standard methodology used to measure the importance of different channels of risk sharing in federal states such as the one used in Asdrubali et al.'s (1996) seminal contribution. It argues that the methodology chosen in these papers systematically underestimates the role federal governments play in stabilizing the business cycle in its member states (and overstates the role of financial markets in stabilization) as it a) ignores the possibility of direct spending by the federal government in a single state stabilizing state GDP, b) strips out effects of transfers and grants in national recessions, c) counts smoothing of distributed profits by domestic firms as "smoothing by capital markets" and d) counts a normal variation of households' savings to smooth consumption as "smoothing by credit markets".

Keywords: European Monetary Union; Income Insurance; International Capital Markets; International Integration; Risk Sharing (search for similar items in EconPapers)
JEL-codes: F15 F36 F45 G15 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.boeckler.de/pdf/p_fmm_imk_wp_02_2017.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imk:fmmpap:02-2017

Access Statistics for this paper

More papers in FMM Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute Contact information at EDIRC.
Bibliographic data for series maintained by Sabine Nemitz ().

 
Page updated 2022-09-27
Handle: RePEc:imk:fmmpap:02-2017