JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.. Oxford University Press is collaborating with JSTOR to digitize, preserve and extend access to The QuarterlyWe develop a framework for quantifying the amount of risk sharing among states in the United States, and construct data that allow us to decompose the cross-sectional variance in gross state product into several components which we refer to as levels of smoothing. We find that 39 percent of shocks to gross state product are smoothed by capital markets, 13 percent are smoothed by the federal government, and 23 percent are smoothed by credit markets. The remaining 25 percent are not smoothed. We also decompose the federal government smoothing into subcategories: taxes, transfers, and grants to states.

This paper develops a method to estimate jointly the degree of intertemporal consumption smoothing and the degree of "inter-regional" risk sharing. The empirical results for the U.S. states and OECD and EU countries suggest that: (i) regardless of the assumption on the degree of intertemporal consumption smoothing, the degree of risk sharing within a country is larger than across countries; (ii) the degree of intertemporal consumption smoothing within a country is also larger than across countries; and (iii) the difference between the degree of intertemporal consumption smoothing within U.S. states and across OECD and EU countries is as large as the difference between the degree of risk sharing, contrary to the findings of some past studies. Copyright (c) 2008 The Ohio State University.

This paper uses a panel VAR model to improve upon the existing literature on interregional risk sharing channels (e.g. Asdrubali, Sorensen and Yosha, 1996) in several respects. First, it endogenizes the output process within a multi-equation framework, capturing the dynamic feedback between output and various risk sharing channels. Second, in contrast to previous research's analysis of static risk sharing in the presence of exogenous output shocks, it uses impulse response functions to trace the role of each risk sharing channel over time, in the presence of different structural shocks (temporary vs. persistent and output vs. risk sharing channels). Third, the paper extends the risk sharing channels typically analyzed, by considering the consumption smoothing role of changes in the nominal exchange rate and relative commodity prices across regions. As a result, it is able to better address such policy issues as whether public risk sharing has been a substitute or a complement for financial market diversification activities, or whether the risk sharing role of exchange rate movements in Europe has been relatively unimportant.

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This article analyses the allocation, redistribution and stabilization role of the EU budget from 1976 to 2001. We use impulse responses from VAR models to infer the dynamic effect of a country's GNP on its disposable income -defined as GNP plus net EU budget transfers -both in the short run (stabilization) and in the long run (redistribution). In addition, we measure the allocation role of net budget transfers through their 'dynamic multiplier' effect on a country's GNP, circumventing the difficult task of estimating allocation via costs and benefits of trade flows. By disaggregating our data by sub-period and by budget component, we discover how diverse the above effects can be in different decades, for different budget programmes and for different Member States. Finally, our framework allows us to establish some additional stylized facts that help derive relevant economic relations and useful policy conclusions.* We would like to thank Fabrizio Barca, Efisio Espa, PierGiorgio Gawronski, Giovanni Marini, Mario Nava, and Crescenzo Rajola for their invaluable comments. All remaining errors are our own responsibility.