Intra-national risk-sharing and government sizes: evidence from nonlinear regression
This article investigates the effects of government sizes on the cyclical elasticity coefficient. Theory of intra-national risk-sharing evaluates the effects of the cyclical sensitivity of taxes to income fluctuation across US states. Because government size is a proxy for automatic stabilizer, which captures the relevant differences of fiscal variables at the state level; hence, the cyclical sensitivity may differ across various magnitudes of local government. We employ two nonlinear econometric methods: threshold regression of panel data (Hansen, 1999) and semi-parametric smooth-coefficient regression of cross-sectional data (Koop and Tobias, 2006). Evidence from a panel of 50 US states supports a positive relationship between government size and intra-national risk-sharing.
Year of publication: |
2011
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Authors: | Ho, Tsung-Wu |
Published in: |
Applied Economics. - Taylor & Francis Journals, ISSN 0003-6846. - Vol. 43.2011, 19, p. 2481-2492
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Publisher: |
Taylor & Francis Journals |
Saved in:
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