This paper analyses the smoothing of asymmetric shocks to output for a sample of OECD countries. It also examines whether the private capital markets will be able to replace the government in providing output smoothing in the euro-area, in the near future. The research finds no evidence of large...

We show empirically that regions with a more specialized production structure exhibit output fluctuations that are less correlated with those of other regions (less \symmetric fluctuations). Combined with the causal relation running from capital market integration to regional specialization...