Interregional Risk Sharing and Fiscal Redistribution in Reunified Germany
This paper provides empirical evidence of interregional risk sharing in reunified Germany. The focus is on two related questions: First, to what extent do private institutions and the public sector provide insurance against asymmetric shocks to individual regions? Second, to what extent does the public sector reduce long-term di¤erences between regions? While the federal government channel is not found to have a stabilizing e¤ect, private factor income flows provide almost complete insurance against short-term shocks. In sharp contrast, the fiscal transfer system achieves a substantial reduction of long-term disparities between regions. These results show that fiscal transfers in reunified Germany are mainly concerned with redistribution in favor of depressed regions rather than providing insurance against idiosyncratic shocks.
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- Pierfederico Asdrubali & Soyoung Kim, 2000.
"Dynamic Risk Sharing in the United States and Europe,"
Econometric Society World Congress 2000 Contributed Papers
1621, Econometric Society.
- Asdrubali, Pierfederico & Kim, Soyoung, 2004. "Dynamic risksharing in the United States and Europe," Journal of Monetary Economics, Elsevier, vol. 51(4), pages 809-836, May.
- Bernard Fingleton & Enrique López-Bazo, 2006. "Empirical growth models with spatial effects," Papers in Regional Science, Wiley Blackwell, vol. 85(2), pages 177-198, 06.
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