Is Acting Prosocially Beneficial for the Credit Market?

This article argues that behaving prosocially reduces regional finance differentials in terms of interest and insolvency rates. This is because prosociality implies more transparent information and cooperation among the parties engaged in a financial contract. The context of study is Italy, well known for its regional economic and financial disparities. The analysis is developed through a cross-regional two period panel model during the years 1998 and 2003. Empirical evidence shows that regions with a higher proportion of prosocial individuals report lower interest and insolvency rates. When legal enforcement is included in the specified model, evidence suggests that more efficient third-party enforcement can transmit a stronger sense of legal abidance and facilitate the internalisation of social norms of cooperation.     

A note on direct term structure estimation using monotonic splines

A monotonic spline parametrization is proposed as a reliable alternative to the traditional Bernstein-based approach for Direct Term Structure Estimation. Numerical experiments with Italian bond data demonstrate the effectiveness of the proposed method.     

Sustaining Collusion under Economic Integration*

In this paper, we aim at investigating from a game‐theory perspective whether trade liberalization can promote a collusive two‐way trade. We show that, under Cournot competition, economic integration is anti‐competitive if collusive trade is a possible outcome of the repeated game; under price competition, the likelihood of collusive trade is a necessary but not sufficient condition for trade liberalization to be pro‐competitive. Furthermore, we show that economic integration may increase the scope for collusion irrespective of the firms’ strategic variable.     

Measuring Restrictiveness of Bilateral Trade Policies: A Comparison between Developed and Developing Countries

This paper compares the degree of openness to trade of three developed countries markets—the European Union, Japan, the United States—with that of three middle-income countries, namely Brazil, India, and China. A theoretically consistent protection measure—the Mercantilistic Trade Restrictiveness Index (MTRI)—is employed to average tariffs at different levels of aggregation. The computation relies on a comparative static applied general equilibrium model (Global Trade Analysis Project—GTAP) featuring imperfect competition as well as on the bilateral applied tariffs included in the most recent version of the GTAP database. Results provide a different picture from what could have been expected given the widely publicized diffusion of preferential schemes supposedly favoring developing countries exports. JEL no.  F17, C68, Q17     

Optimal Fiscal Regime in a Spatial Duopoly

We investigate a horizontally differentiated duopoly in which a public authority can either tax or subsidize firms, in order to induce duopolists to choose the socially optimal locations. The policy proposed here is such that welfare maximization is achieved by directly affecting firms' location without explicitly modifying their price behavior.     

Explaining asset pricing puzzles associated with the 1987 market crash

The 1987 market crash was associated with a dramatic and permanent steepening of the implied volatility curve for equity index options, despite minimal changes in aggregate consumption. We explain these events within a general equilibrium framework in which expected endowment growth and economic uncertainty are subject to rare jumps. The arrival of a jump triggers the updating of agents' beliefs about the likelihood of future jumps, which produces a market crash and a permanent shift in option prices. Consumption and dividends remain smooth, and the model is consistent with salient features of individual stock options, equity returns, and interest rates.     

Growth and social capital: an evolutionary model

In this paper, we analyze the role of cooperation between firms through a model of growth and social capital. In a growth model à la Solow we incorporate the set of resources that a relational network has at its disposals, as a distinct production factor, and thus examine its dissemination through evolutionary type processes in firm interactions. Dynamic analysis of the model demonstrates that cooperation is able to increase the productivity of factors, fostering a higher rate of growth in the long term. The most significant result is that scarcity of social capital can produce a general collapse of the economic system in areas in which long term growth is usually sustained by the learning by doing and spillover of knowledge phenomena. This conclusion leads to reconsider the role of local development economic policies that should concentrate on activities that promote repeated interaction between firms proven to be cooperative or that encourage the formation of technological consortia.     

Destination choice and the identity of places: A disaggregated analysis for different types of visitor population environment in the Netherlands

Individual behaviour relates to the ecological structure or identity of places. In this study, we investigated the relationship between the space–time ecologies of different types of visitor population environment in the Netherlands and destination choice. Multinomial logistic regression modelling for car users was applied to determine the relative importance of various personal and household attributes on choosing for a particular purpose a particular type of visitor population environment during a particular time period of the day. The attributes with the strongest link to the space–time ecologies of destination environments proved to be age, educational level, car ownership, and household income and type.     

Stackelberg leadership in a dynamic duopoly with stochastic capital accumulation

I propose a dynamic duopoly model where firms enter simultaneously but compete hierarchically á la Stackelberg at each instant over time. They accumulate capacity through costly investment, with capital accumulation dynamics being affected by an additive shock the mean and variance of which are known. The main findings are the following. First, the Stackelberg game is uncontrollable by the leader; hence, it is time consistent. Second, the leader invests more than the follower; as a result, in the steady state, the leader’s capacity and profits are larger than the follower’s. Therefore, the present analysis does not confirm Gibrat’s Law, since the individual growth rate is determined by the timing of moves.JEL Classification: C61, C73, D43, D92, L13Financial support within the project The post-entry performance of firms: technology, growth and survival lead by Enrico Santarelli, co-financed by the University of Bologna and MIUR, is gratefully acknowledged. I thank Uwe Cantner, Roberto Cellini, Roberto Golinelli, Helen Louri, Enrico Santarelli, Antonello Scurcu, Peter Thompson, two anonymous referees and the audience at the final workshop of the project (Bologna, November 22-23, 2002) for useful comments and discussion. The usual disclaimer applies.     

Estimating the financial crisis’ impact on potential output

I use a multivariate Blanchard-Quah decomposition to investigate the financial crisis’ impact on potential output in the Euro area, the US, Japan, and the UK. I detect an impact for all countries, which is especially severe for the UK.