|Title:||Interregional risk sharing and fiscal redistribution in reunified Germany|
|Abstract:||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 differences between regions? While the federal government channel is not found to have a stabilizing effect, 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.|
|Subject Headings:||Distribution dynamics|
Interregional risk sharing
|Appears in Collections:||Sonderforschungsbereich (SFB) 475|
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