Interregional risk sharing and fiscal redistribution in reunified Germany
Loading...
Date
2006-11-10T07:45:28Z
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
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.
Description
Table of contents
Keywords
Distribution dynamics, Fiscal redistribution, Interregional risk sharing, Regional disparities