Channels of risk-sharing among Canadian provinces: 1961--2006

Faruk Balli, Syed Basher and Rosmy Jean Louis

MPRA Paper from University Library of Munich, Germany

Abstract: This paper incorporates recent developments in the literature to quantify the amount of interprovincial risk-sharing in Canada. We find that 29% of shocks to gross provincial product are smoothed by capital markets, 27% are smoothed by the federal tax-transfer systems, and about 24% are smoothed by credit markets. The remaining 20% are not smoothed. Our results bring to light the critical role that Alberta plays in trading-off credit market smoothing for more capital market risk-sharing with the rest of Canada. Our pairwise risk-sharing analysis has brought up some interesting questions and arguments that are often neglected in discussions of regional risk-sharing. For example, one aspect of the pairwise analysis sheds light on the assessment of the economic effects of Quebec separation.

Keywords: Risk-sharing; pairwise risk-sharing; federal taxes and transfer; panel data; cross-sectional dependence. (search for similar items in EconPapers)
JEL-codes: C33 E21 F36 H77 (search for similar items in EconPapers)
Date: 2011-05-12
New Economics Papers: this item is included in nep-geo
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Channels of risk-sharing among Canadian provinces: 1961–2006 (2012)
Working Paper: Channels of risk-sharing among Canadian provinces: 1961–2006 (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:30876

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