Optimal unemployment insurance and international risk sharing
| Autor: | Nikolai Stähler, Stéphane Moyen, Fabian Winkler |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2016 |
| Předmět: |
Economics and Econometrics
Labour economics International Business Cycles media_common.quotation_subject Business interruption insurance Unemployment Insurance 0502 economics and business Business cycle Economics ddc:330 050207 economics 050205 econometrics media_common E32 Fiscal Union 05 social sciences Financial market Periphery countries General insurance International Risk Sharing Key person insurance Unemployment H20 Risk pool H21 J64 E62 Finance |
| Popis: | We discuss how cross-country unemployment insurance can be used to improve international risk sharing. We use a two-country business cycle model with incomplete financial markets and frictional labor markets where the unemployment insurance scheme operates across both countries. Cross-country insurance through the unemployment insurance system can be achieved without affecting unemployment outcomes. The Ramsey-optimal policy however prescribes a more countercyclical replacement rate when international risk sharing concerns enter the unemployment insurance trade-off. We calibrate our model to Eurozone data and find that optimal stabilizing transfers through the unemployment insurance system are sizable and mainly stabilize consumption in the periphery countries, while optimal replacement rates are countercyclical overall. Moreover, we find that debt-financed national policies are a poor substitute for fiscal transfers. |
| Databáze: | OpenAIRE |
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