Risk sharing, avversione al rischio e stabilizzazione delle economie regionali in Italia.

We investigate the occurrence of risk sharing among Italian regions with respect to both long run and short run income fluctuations by means of Vector Equilibrium Correction Models (VEqCMs) which allow to test all implications of the theory without preliminary filtering or transformations of data, and without imposing constraints on the homogeneity of preferences across regions. Our estimates over the 1960-1965 period show that preferences are not homogenous across regions and that the evidence in favour of regional risk sharing is more pronounced than commonly highlighted in previous research. Results also show that in Italy risk sharing devices acting through markets or through the welfare state would in principle allow the optimal stabilisation of regional economies, however the effectiveness of such tools is negatively affected by the environment where regions act: risk aversion prevents the mobility of labour force as well as portfolio diversification and thus restricts the full effectiveness of strategies.