If a negative shock hits an industry or a specific region, then this loss is spread widely beyond the state. But in return, shareholders throughout the country also receive a share of the profits during the good times.
When compared with the equity capital markets, the significance of the credit markets as a buffer is lower: around 25% of cyclical fluctuations are evened out via the credit markets. Fiscal cushioning mechanisms, however, are by far the least significant: only 10% to 15% of economic shocks are absorbed through public finances.8 This last figure is similar in other federal systems.