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Risk Sharing Heterogeneity in the United States

Author

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  • Daniel Stempel

    (Heinrich Heine University Düsseldorf)

Abstract

Several studies document high risk sharing against output fluctuations in the United States. Building on these studies, this note documents substantial heterogeneity in interstate risk sharing between US states. Using a panel data set ranging from 1963 to 2013, aggregate and state-specific risk sharing profiles are estimated. Moreover, four distinct clusters of states, each characterized by a unique risk sharing profile emphasizing one specific consumption insurance channel, are derived. This note then shows that this heterogeneity in insurance levels and profiles is related to differences in state characteristics, such as the composition of state output, insurance opportunities, vulnerability to idiosyncratic shocks, and the capacity to finance countercyclical policies.

Suggested Citation

  • Daniel Stempel, 2021. "Risk Sharing Heterogeneity in the United States," Economics Bulletin, AccessEcon, vol. 41(3), pages 1223-1240.
  • Handle: RePEc:ebl:ecbull:eb-20-01187
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    References listed on IDEAS

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    7. Cimadomo, Jacopo & Ciminelli, Gabriele & Furtuna, Oana & Giuliodori, Massimo, 2020. "Private and public risk sharing in the euro area," European Economic Review, Elsevier, vol. 121(C).
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    Cited by:

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    2. Cimadomo, Jacopo & Giuliodori, Massimo & Lengyel, Andras & Mumtaz, Haroon, 2023. "Changing patterns of risk-sharing channels in the United States and the euro area," Working Paper Series 2849, European Central Bank.

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    More about this item

    Keywords

    Risk Sharing; Consumption Insurance; Heterogeneity; Monetary Union;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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