The authors develop a framework for quantifying the amount of risk sharing among states in the United States and construct data that allow them to decompose the cross-sectional variance in gross state product into several components which they refer to as levels of smoothing. They find that 39...

We develop a framework for quantifying the amount of risksharing among states in the US, and construct data which allow us to decompose a shock to gross state product into several components. For the period 1963-1990 we find that 40% of shocks to state gross domestic product are smoothed by...