Risk Sharing Among OECD And EU Countries: The Role Of Capital Gains, Capital Income, Transfers, And Saving

The authors estimate the amount of income and consumption smoothing (risk sharing) between OECD countries during the period 1970-2003 with a particular focus on EU and EMU countries. Income smoothing from international factor income has increased in the EU and, in particular, the EMU but not in the non-EU OECD since the introduction of the Euro. Consumption smoothing from pro-cyclical government saving has declined in the EMU, but not in the non-EU OECD, since the signing of the Maastricht treaty.