Output Smoothing in EMU and OECD: Can We Forego Government Contribution? A Risk Sharing Approach
AbstractThis 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.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1051.
Date of creation: 2003
Date of revision:
EMU; output smoothing; risk sharing; international capital markets; economic integration;
Other versions of this item:
- Carlos Marinheiro, 2003. "Output Smoothing in EMU and OECD: Can We Forego Government Contribution? A risk sharing approach," GEMF Working Papers 2003-02, GEMF - Faculdade de Economia, Universidade de Coimbra.
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F15 - International Economics - - Trade - - - Economic Integration
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-05-02 (All new papers)
- NEP-IFN-2004-05-02 (International Finance)
- NEP-REG-2004-05-02 (Regulation)
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