IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/4460.html

Risk Sharing and EMU

Author

Listed:
  • Melitz, Jacques

Abstract

What are the prospects that risk sharing in EMU will ever attain the levels in the US? So far as the risk sharing in the US depends on interregional transfers through the budget of the federal government, those prospects are poor. So far as the risk sharing in the US takes place though market channels, they are much better. The Paper addresses the theory and evidence on the subject. The evidence would indicate that EMU still lags far behind the US as regards the pooling of risks through portfolio diversification. But there already seems to be little to distinguish the euro area from the US concerning the ability to borrow to smooth shocks. Thus, some extra risk sharing should already be taking place in the euro area through this channel. How much? Further, there is also evidence that the progress of European economic and monetary integration over the last decade has increased the symmetry of business cycles. This evidence is difficult to interpret. It could even be a sign of remaining capital-market imperfections. One of the issues in the Paper is the adequacy of the general framework that Asdrubali, Sørensen and Yosha have proposed for dealing with all of these questions.

Suggested Citation

  • Melitz, Jacques, 2004. "Risk Sharing and EMU," CEPR Discussion Papers 4460, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4460
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP4460
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michael Artis, 2008. "What do we now know about currency unions?," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 1(1), pages 13-29.
    2. Mr. Paul Cashin & Mr. Antonio Lemus, 2012. "The Eastern Caribbean Currency Union: Would a Fiscal Insurance Mechanism Mitigate National Income Shocks?," IMF Working Papers 2012/017, International Monetary Fund.
    3. George S. Tavlas, 2009. "Optimum‐Currency‐Area Paradoxes," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 536-551, August.
    4. Hughes Hallett, Andrew & Scott, Drew, 2010. "Scotland: A New Fiscal Settlement," SIRE Discussion Papers 2010-23, Scottish Institute for Research in Economics (SIRE).
    5. Francesco Paolo Mongelli, 2008. "European Economic and Monetary Integration, and the Optimum Currency Area Theory," European Economy - Economic Papers 2008 - 2015 302, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    6. Hughes Hallett, Andrew & Scott, Drew, 2010. "Scotland: A New Fiscal Settlement," SIRE Discussion Papers 2010-23, Scottish Institute for Research in Economics (SIRE).
    7. Mongelli, Francesco Paolo & De Grauwe, Paul, 2005. "Endogeneities of optimum currency areas: what brings countries sharing a single currency closer together?," Working Paper Series 468, European Central Bank.
    8. Yuliya Demyanyk & Charlotte Ostergaard & Bent E. Sørensen, 2007. "U.S. Banking Deregulation, Small Businesses, and Interstate Insurance of Personal Income," Journal of Finance, American Finance Association, vol. 62(6), pages 2763-2801, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:4460. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.