Output Smoothing in EMU and OECD: Can We Forego Government Contribution? A Risk Sharing Approach
This paper analyses the smoothing of asymmetric shocks to output for a sample of OECD countries. It also examines whether the private capital markets will be able to replace the government in providing output smoothing in the euro-area, in the near future. The research finds no evidence of large differences in the patterns of risk sharing for the 19 OECD countries, the EU-15 or euro-area countries, for the period 1970-1999. However, there were shown to be considerable differences between the euro-area and the successful monetary union of the USA: the euro-area showed a much lower insurance of asymmetric shocks than the US states. Until increasing economic integration in Europe does not lead to a substantial decrease in the incidence of idiosyncratic shocks, such shocks may impose non-negligible welfare costs.
|Date of creation:||2003|
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- Jacques Mélitz & Frédéric Zumer, 1999.
"Interregional and International Risk Sharing and Lessons for EMU,"
Sciences Po publications
n°2154, Sciences Po.
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"'Close-to-Balance or in Surplus': A Policy-Maker's Guide to the Implementation of the Stability and Growth Pact,"
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Wiley Blackwell, vol. 38(4), pages 563-591, November.
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