Financial markets provide imperfect insurance of labor income risk. However, workers can partly insure against labor … market risk by commuting to adjacent regions. Since commuters own wage claims to output produced in adjacent regions, the … business cycle in the neighborhood becomes a relevant risk factor at the regional level. In our empirical analysis for US …

the US over the period 1952-2001. Theoretically, the effect of income risk on consumption changes is decomposed into an … aggregate and into a consumer-specific part. Empirically, aggregate risk is modelled through a GARCH process on aggregate income … that aggregate income risk explains a negligible fraction of the variance of aggregate consumption changes. A more …

aggregate risk sharing are more pronounced in states in which small firms account for a large share income or employment. In … downturns. -- Interstate risk sharing ; regional business cycle ; proprietary income ; small businesses ; state banking …Consumption risk sharing among U.S. federal states increases in booms and decreases in recessions. We find that small …

State-level consumption exhibits excess sensitivity to lagged income to the same extent as US aggregate data, but state …-specific (idiosyncratic) consumption exhibits substantially less sensitivity to lagged state-specific income - a result that also holds for … reaction of consumption to idiosyncratic disposable income shocks even if it fails at the aggregate US level. Further analysis …

the US over the period 1952-2001. Theoretically, the effect of income risk on consumption changes is decomposed into an … aggregate and into a consumer-specific part. Empirically, aggregate risk is modelled through a GARCH process on aggregate income … that aggregate income risk explains a negligible fraction of the variance of aggregate consumption changes. A more …

Uninsurable income risk is often cited as an explanation for empirical deviations from the Lifecycle/Permanent-Income … using a calibrated income process that matches the results in Feigenbaum and Li (2008). In that paper they measure income … uncertainty as the variance of income forecasting errors at different ages and over different time horizons. Here we show that …

income risk matters substantially for consumption …We measure the extent of consumption insurance to income shocks accounting for high-order moments of the income … income shocks. Using PSID data, we estimate an asymmetric pass-through of bad versus good permanent shocks – 17% of a 3σ …