Channels of Interstate Risksharing: U.S. 1963-1990
AbstractWe develop a framework for quantifying the amount of risksharing among states in the US, and construct data which allow us to decompose a shock to gross state product into several components. For the period 1963-1990 we find that 40% of shocks to state gross domestic product are smoothed by capital markets, 14% are smoothed by the federal government, and 24% are smoothed by credit markets. The remaining 22% are not smoothed. We decompose the federal government smoothing into sub-categories: taxes, transfers, and grants to states, finding, for example, that in comparision to the tax-transfer system, the magnitude of smoothing through the grant system is small (2.7% of a shock), and that the unemployment insurance system smoothes 1.8% of a shock. Finally, we repeat the analysis for two sub-periods, finding that the amount and composition of federal government smoothing is stable through time. However, we detect an increase in the amount of capital markets smoothing, a sharp decrease in the amount of credit market smoothing, and a decrease in the overall fraction of a shock smoothed.
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Bibliographic InfoPaper provided by Tel Aviv in its series Papers with number 07-95.
Length: 28 pages
Date of creation: 1995
Date of revision:
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Postal: Israel TEL-AVIV UNIVERSITY, THE FOERDER INSTITUTE FOR ECONOMIC RESEARCH, RAMAT AVIV 69 978 TEL AVIV ISRAEL.
Web page: http://econ.tau.ac.il/research/foerder.asp
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risk ; states ; government policy;
Other versions of this item:
- P. Asdrubali & Bent E. S�rensen & Oved Yosha, 1995. "Channels of Interstate Risksharing : US 1963-1990," Working Papers 95-13, Brown University, Department of Economics.
- Bent E. Soerensen & Pierfederico Asdrubali & Oved Yosha, . "Channels of Interstate Risksharing: US 1963-1990," EPRU Working Paper Series 95-04, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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