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Asymmetric shocks among U.S. states

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Abstract

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.

Suggested Citation

  • Marco Del Negro, 2000. "Asymmetric shocks among U.S. states," FRB Atlanta Working Paper 2000-27, Federal Reserve Bank of Atlanta.
  • Handle: RePEc:fip:fedawp:2000-27
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    More about this item

    Keywords

    Consumption (Economics); Business cycles;

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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