Cross-Region Transfers in a Monetary Union : Evidence from the US and Some Implications
US federal transfers to individuals are large, countercyclical, vary geographically, and are often credited for helping stabilize regional economies. This paper estimates the short-run effects of these transfers using plausibly exogenous regional v...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/486411589304789870/Cross-Region-Transfers-in-a-Monetary-Union-Evidence-from-the-US-and-Some-Implications http://hdl.handle.net/10986/33756 |
| Summary: | US federal transfers to individuals are
large, countercyclical, vary geographically, and are often
credited for helping stabilize regional economies. This
paper estimates the short-run effects of these transfers
using plausibly exogenous regional variation in temporary
stimulus packages and earlier permanent Social Security
increases. States that received larger transfers tended to
grow faster contemporaneously, with a multiplier of around
1.5 for permanent transfers and 1/3 for temporary transfers.
Results are broadly consistent with an open-economy New
Keynesian model. At business-cycle frequencies, cross-region
transfer multipliers are not large, suggesting only modest
gains in regional stabilization from US federal automatic stabilizers. |
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