Government Size, Trade Openness, and Output Volatility: A Case of Fully Integrated Economies

Arbeitspapier

Government is often considered the safe sector of an open economy that provides households with insurance against external risk exposure. Among highly integrated economies, however, households should be able to exploit common financial markets to insure themselves. In this paper we examine the relationship between government size, trade openness, and output volatility across fully integrated economies using Japan’s regional income accounting and public finance data. The contributions of the government- and market-based insurances to inter-regional risk sharing are also estimated. The empirical results reveal some unique aspects of the state-market interactions under full economic integration with vertical fiscal imbalance.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 5563

Classification and Topics

• Classification: Wirtschaft ; Structure and Scope of Government: General ; State and Local Government; Intergovernmental Relations: General ; Macroeconomic Aspects of International Trade and Finance: General
• Subject: government size ; output volatility ; risk-sharing ; trade openness ; vertical fiscal imbalance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fujii, Eiji
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/123214
• Last update: 10.03.2025, 11:42 AM CET