Andersson, Linda () (Department of Economics, Umeå University)
Abstract
The objective of this paper is to analyze the amount of risk sharing of output that takes place between regions in Sweden. Using the approach by Asdrubali et al. (1996), further developed by Mélitz and Zumer (2002), we find that the capital market is the largest source of risk sharing of gross regional product in Sweden. Still, roughly 12 percent of a change in regional output is smoothed among the regions through the fiscal system. Taking a closer look at the fiscal component, the results suggest that national taxes play a larger role in the smoothing process than transfer payments do. There is also some evidence that there are regional differences in the sense that regions located in the south rely more on the capital market as a source of insurance against shocks in output, while the tax and transfer systems provide a larger extent of risk sharing for regions located in the north.
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Publisher Info
Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number
643.
Length: 17 pages Date of creation: 05 Nov 2004 Date of revision: Handle: RePEc:hhs:umnees:0643
Contact details of provider: Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden Phone: 090 - 786 61 42 Fax: 090 - 77 23 02 Email: Web page: http://www.econ.umu.se/ More information through EDIRC
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Find related papers by JEL classification: E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism R50 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - General
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