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...

In this paper we examine the formal implications of international risk sharing among a set of countries in the presence of market frictions and forward-looking behaviour. We show that if frictions prevent consumption to adjust instantaneously to its optimal long run level, consumption streams in...