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International consumption risk sharing and fiscal policy

Listed author(s):
  • Gilbert Koenig

    ()

    (BETA- University of Strasbourg)

  • Irem Zeyneloglu

    ()

    (GIAM- Galatasaray University)

The present paper uses a two-country stochastic general equilibrium model assuming incomplete financial markets and non-separable consumer preferences to show how optimal fiscal responses to an asymmetric productivity shock can mitigate the worsening of the international consumption risk sharing following the shock. It also identifies the conditions under which the gains from fiscal stabilization can be improved by cooperative responses.

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File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I2-P119.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 32 (2012)
Issue (Month): 2 ()
Pages: 1250-1260

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Handle: RePEc:ebl:ecbull:eb-12-00231
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  1. Robert P. Flood & Nancy P. Marion & Akito Matsumoto, 2012. "International risk sharing during the globalization era," Canadian Journal of Economics, Canadian Economics Association, vol. 45(2), pages 394-416, May.
  2. Morten Spange, 2007. "Do Structural Asymmetries Increase The Gains From International Fiscal Policy Coordination?," Manchester School, University of Manchester, vol. 75(1), pages 131-150, 01.
  3. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, January.
  4. Andersen, Torben M. & Spange, Morten, 2006. "International interdependencies in fiscal stabilization policies," European Economic Review, Elsevier, vol. 50(5), pages 1169-1195, July.
  5. Giovanni P. Olivei, 2000. "Consumption risk-sharing across G-7 countries," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 3-14.
  6. Mathias Hoffmann, 2008. "The Lack of International Consumption Risk Sharing: Can Inflation Differentials and Trading Costs Help Explain the Puzzle?," Open Economies Review, Springer, vol. 19(2), pages 183-201, April.
  7. Sutherland, Alan & Lombardo, Giovanni, 2003. "Monetary and fiscal interactions in open economies," Working Paper Series 289, European Central Bank.
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