An Assessment of Regional Risk Sharing in Italy and the United Kingdom

39 Pages Posted: 8 Jun 1998

See all articles by Luca Dedola

Luca Dedola

Bank of Italy; European Central Bank (ECB)

Stefano Usai

Universita di Cagliari

Marco Vannini

Università degli Studi di Sassari; Universita di Cagliari - Centre for North South Economic Research (CRENOS)

Date Written: January 1998

Abstract

We investigate what amount of risk sharing European countries entering a monetary union can hope to achieve by looking at the regions of Italy and the UK: two countries with very different financial systems and policy regimes. More precisely, we measure the contribution to risk sharing stemming from a) cross-ownership of productive and financial assets, b) government tax-transfer system, and c) portfolio adjustments by agents through lending and borrowing on credit markets. We find that both the extent of risk sharing and the relative weights of various channels in the two countries differ meaningfully, with a major role played by the State in the case of Italy. Moreover, the smoothing patterns seem to vary according to the persistency of shocks.

JEL Classification: E21, E32, E62, H71

Suggested Citation

Dedola, Luca and Usai, Stefano and Vannini, Marco, An Assessment of Regional Risk Sharing in Italy and the United Kingdom (January 1998). Available at SSRN: https://ssrn.com/abstract=96728 or http://dx.doi.org/10.2139/ssrn.96728

Luca Dedola

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Stefano Usai (Contact Author)

Universita di Cagliari ( email )

Cagliari, 09124
Italy

Marco Vannini

Università degli Studi di Sassari ( email )

Via Regina Margherita 15
07100 Sassari
Italy

Universita di Cagliari - Centre for North South Economic Research (CRENOS) ( email )

V. S. Ignazio 78
Cagliari, 09124
ITALY

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