Subnational fiscal balance, interregional redistribution and risk-sharing in Italy

Luca Gandullia () and Lucia Leporatti ()

Regional Studies, 2020, vol. 54, issue 3, 318-328

Abstract: This paper provides new estimates of redistribution and risk-sharing across regional territories accomplished by the Italian public sector. For the first time, subnational governments’ fiscal balances are explicitly considered and a different methodological approach is followed, providing risk-sharing estimates also at a regional level. It is found that public policies only slightly reduce permanent differences in per capita gross domestic product (GDP) across regions (0.9–2.7%), but, at the same time, they enhance idiosyncratic shocks by 4.8%. Risk-sharing estimates differ significantly among regions that can partially self-insure through fiscal deficits. New estimates diverge from those assessed with traditional methods and suggest important policy implications.

Date: 2020
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DOI: 10.1080/00343404.2019.1656332

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