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Incomplete interregional risk sharing with complete markets

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dc.affiliation.dptoUC3M. Departamento de Economíaes
dc.contributor.authorCelentani, Marco
dc.contributor.authorConde-Ruiz, J. Ignacio
dc.contributor.authorDesmet, Klaus
dc.contributor.otherCentre for Economic Policy Research
dc.date.accessioned2012-05-24T17:42:24Z
dc.date.available2012-05-24T17:42:24Z
dc.date.issued2002-02
dc.description.abstractWe analyze risk sharing and fiscal spending in a two-region model with complete markets. Fiscal policy is determined by majority voting. When policy setting is decentralized, regions choose pro-cyclical fiscal spending in an attempt to manipulate securities prices to their benefit. This leads to incomplete risk sharing, despite the existence of complete markets and the absence of aggregate risk. When a fiscal union centralizes fiscal policy, securities prices can no longer be manipulated and complete risk sharing ensues. If regions are homogeneous, median income residents of both regions prefer the fiscal union. If they are heterogeneous, the median resident of the rich region prefers the decentralized setting
dc.description.sponsorshipMarco Celentani acknowledges the financial support of MCYT (Spain) under project PB98-00024. José-Ignacio Conde-Ruiz acknowledges the financial support of MECD (Spain) under project EX200l-02885993E. Klaus Desmet acknowledges the financial support of the Commission for Cultural Educational and Scienlific Exchange between the United States of America and Spain (Project 7-42) and the Comunidad de Madrid (Project 06/O064/2000).
dc.format.mimetypeapplication/pdf
dc.identifier.urihttps://hdl.handle.net/10016/14393
dc.language.isoeng
dc.rightsAtribución-NoComercial-SinDerivadas 3.0 España
dc.rights.accessRightsopen access
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.ecienciaEconomía
dc.subject.jelC72
dc.subject.jelD72
dc.subject.jelE61
dc.subject.otherFiscal policy
dc.subject.otherVoting
dc.subject.otherRisk sharing
dc.titleIncomplete interregional risk sharing with complete markets
dc.typeworking paper*
dspace.entity.typePublication
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