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Asymmetric shocks among U.S. states

  • Del Negro, Marco

This paper applies a factor model to the study of risk sharing among U.S. states. The factor model makes it possible to disentangle movements in output and consumption due to national, regional, or state-specific business cycles from those due to measurement error. The results of the paper suggest that some findings of the previous literature which indicate a substantial amount of interstate risk sharing may be due to the presence of measurement error in output. When measurement error is properly taken into account, the evidence points towards a lack of interstate smoothing.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 56 (2002)
Issue (Month): 2 (March)
Pages: 273-297

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Handle: RePEc:eee:inecon:v:56:y:2002:i:2:p:273-297
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