The Distributional Incidence of Growth: A Social Welfare Approach

This paper provides a normative framework for the assessment of the distributional incidence of growth. By removing the anonymity axiom, such framework is able to evaluate the individual income changes over time and the reshuffling of individuals along the income distribution that are determined by the pattern of income growth. We adopt a rank dependent social welfare function expressed in terms of initial rank and individual income change and we obtain partial and complete dominance conditions over different growth paths. These dominance conditions account for the different components determining the overall impact of growth, that is the size of growth and its vertical and horizontal incidence. We then provide an empirical application for Italy: this analysis shows the distributional impact of the recent economic crisis suffered by the Italian populaltion.     

Chinese and Indian Multinationals: A Firm-Level Analysis of their Investments in Europe

Abstract

This paper contributes to the literature on Chinese and Indian multinationals investing in Europe through an empirical investigation about their identity, their characteristics and the association between their features and their international strategies. The investigation exploits a database, named EMENDATA (Emerging Multinationals’ Events and Networks DATAbase), at the level of the investing firms. In relation to the mode of entry, we find that greenfield investments are a more likely option for large-sized companies. Moreover a high propensity for innovation is associated with a high probability to enter with an acquisition and with technological asset-seeking investments. Finally, high profitability is needed to invest in the EU-core countries.     

Optimal monetary policy using an unrestricted VAR

This paper proposes a simple benchmark for monetary policy. Assuming the true model of the economy is unknown, it is based on an unrestricted vector autoregression (VAR). The key result is that instead of deriving optimal policy using the original VAR equations as the constraint, when no restriction is placed on the correlation structure of the VAR disturbances, the constraint should be formed from a transformation of the VAR. This method is applied to the USA, 1964–2009. Significant welfare gains are found compared with actual policy and using a Taylor rule. Incorporating a zero interest rate lower bound lowers output and inflation. Copyright © 2010 John Wiley & Sons, Ltd.     

An axiomatic characterization of the Baker-Thompson rule

The airport problem is a widely studied allocation problem, with the aim of providing simple and fair sharing rule for the landing fees. In this note we introduce some fairness criteria and characterize the classical Baker-Thompson allocation rule.     

Optimal Control of Heteroscedastic Macroeconomic Models

This paper analyses the implications of heteroscedasticity for optimal macroeconomic policy and welfare. We find that changes in the variance structure driven by exogenous processes like generalized autoregressive conditional heteroscedasticity (GARCH) affect welfare but not the optimal feedback rule. However, changes in the variance structure driven by state‐dependent processes affect both. We also derive certainty‐equivalent transformations of state‐dependent volatility models that allow standard quadratic dynamic programming algorithms to be employed to study optimal policy. These results are illustrated numerically using a reduced‐form model of the US economy in which changes in volatility are driven by a GARCH process and the rate of inflation. Copyright © 2015 John Wiley & Sons, Ltd.     

Analysing Materials and Energy Flows in an Industrial District using an Enterprise Input–Output Model

Recent approaches to sustainable development leave much room for policies at a local level. In fact, it is becoming evident that targets such as increasing resource productivity, preserving natural cycles, or extending the present level of welfare, are best pursued within the confines of a local area. In particular, environmental changes are best brought about by considering local systems of firms as cornerstones of cooperative strategies and using data on materials and energy use in physical terms. In this paper, an enterprise input–output model is developed for an industrial district, i.e. a local group of firms specialized in the production of a single final output. The model allows for a detailed quantitative analysis of materials and energy flows and the consequent generation of waste and pollution. As a planning tool, the model may be used to evaluate alternative scenarios, such as the possibility of re- using waste taking account of sustainability requirements. An empirical case study applies the model to an industrial district in Southern Italy producing leather sofas.     

A simple and flexible alternative to Stability and Growth Pact deficit ceilings. Is it at hand?

We model a monetary union where fiscal discretion generates excessive debt accumulation in steady state and inefficiently delayed debt adjustment following shocks. By setting a debt target and raising the political cost of deviating from the optimal pace of debt reversal¸ institutional design induces fiscal policymakers to implement unbiased responses to shocks. This is partly achieved by increasing the transparency of the decision-making process. We therefore call for more focused supervision tasks for the European Commission and for parliamentary discussion whenever a disagreement arises between the Commission and a national government.     

Corporate tax reforms and tax-motivated profit shifting: evidence from the EU

This paper examines whether the profit-shifting trend in Europe during 2003–2013 can be explained by tax policy changes. Consistent with prior literature, we find that affiliates’ profits are sensitive to tax rate changes. However, we document that tax base–broadening reforms have mitigated the incentives for both inward and outward profit shifting. In particular, we find that anti-avoidance rules prevent multinational companies from shifting profits out of their foreign affiliates, whereas other tax base–broadening rules, such as restrictions on the deductibility of tax losses or on group tax relief, reduce the incentives for multinational companies to shift profits into foreign affiliates. Furthermore, we find evidence of a downward trend in profit shifting across European countries, especially when the tax enforcement is stricter. Overall, these results suggest that broader tax bases and stricter tax enforcement have successfully curbed this particular tax strategy.     

Public sector efficiency: evidence for new EU member states and emerging markets

In this article, we analyse public sector efficiency in the new member states of the EU compared to that in emerging markets. After a conceptual discussion of expenditure efficiency measurement, we compute efficiency scores and rankings by applying a range of measurement techniques. The study finds that expenditure efficiency across new EU member states is rather diverse especially as compared to the group of top performing emerging markets in Asia. Econometric analysis shows that higher income, civil service competence and education levels as well as the security of property rights seem to facilitate the prevention of inefficiencies in the public sector.