Politico-economic models and cycles

Studies are surveyed analyzing the mutual interaction of economy and polity in an empirically testable way. A wide variety of assumptions are made concerning the behaviour of economic and political decision-makers–in particular voters and government, as well as the economic and political sectors. Representative models are discussed considering steady state equilibria and political business cycles, and empirical results are presented for the U.S., the U.K. and Germany. Finally, the potential and prospects of politico–economic modelling are discussed.     

Deregulated Wholesale Electricity Prices in Italy: An Empirical Analysis

In this paper we analyze a time series of daily average prices in the Italian electricity market, which started to operate as a Pool in April 2004. Our objective is to model the high degree of autocorrelation and the multiple seasonalities in electricity prices. We use periodic time series models with GARCH disturbances and leptokurtic distributions and compare their performance with more classical ARMA-GARCH processes. The within-year seasonal variation is modelled using the low-frequency components of physical quantities, which are very regular throughout the sample. Our results reveal that much of the variability in the price series is explained by the interactions between deterministic multiple seasonalities. Periodic AR-GARCH models seem to perform quite well in mimicking the features of the stochastic part of the price process.

The physics of the city: pedestrians dynamics and crowding panic equation in Venezia

In this paper we present the physics of the city, a new approach in order to investigate the urban dynamics. In particular we focus on the citizens’ mobility observation and modeling. Being in principle the social dynamics not directly observable, our main idea is that observing the human mobility processes we can deduce some features and characteristics of social dynamics. We define the automata gas paradigm and we write a crowding equation able to predict, in a statistical sense, the threshold between a selforganized crowd and a chaotic one, which we interpret as the emergence of a possible panic scenario. We show also some specific results obtained on the Venezia pedestrian network. Firstly, analyzing the network we estimate the Venice complexity, secondly measuring the pedestrian flow on some bridges we find significant statistical correlations, and by the experimental data we design two different bridges flow profiles depending from the pedestrian populations. Furthermore considering a reduced portion of the city, i.e. Punta della Dogana, we build up a theoretical model via a Markov approach, with a stationary state solution. Finally implementing some individual characteristics of pedestrians, we simulate the flows finding a good agreement with the empirical distributions. We underline that these results can be the basis to construct an E-governance mobility system.     

Forecasting tourist arrivals using origin country macroeconomics

This study utilizes both disaggregated data and macroeconomic indicators in order to examine the importance of the macroeconomic environment of origin countries for analysing destinations’ tourist arrivals. In particular, it is the first study to present strong empirical evidence that both of these features in tandem provide statistically significant information of tourist arrivals in Greece. The forecasting exercises presented in our analysis show that macroeconomic indicators conducive to better forecasts are mainly origin country-specific, thus highlighting the importance of considering the apparent sharp national contrasts among origin countries when investigating domestic tourist arrivals. Given the extent of the dependency of the Greek economy on tourism income and also the perishable nature of the tourist product itself, results have important implications for policymakers in Greece.     

Credibility and Monitoring: Outsourcing as a Commitment Device

We analyze an environment plagued by double moral hazard where the agent’s effort level and the principal’s precision in monitoring are not contractible. In such an environment, the principal tends to over‐monitor thereby inducing low effort. To ease the latter problem, the principal may choose to increase monitoring costs by outsourcing the activity. As a result equilibrium monitoring is reduced and incentives become more powerful. This choice is particularly likely when the worker’s effort is an important factor in determining output.     

A political economy model of road pricing

In this paper, we use a simple majority voting model to study the introduction of urban congestion tolls. The model allows for different types of uncertainty and considers different uses of the toll revenues. The following results are obtained. First, we show that individual uncertainty with respect to modal substitution costs may imply that a majority votes against road pricing ex ante, although a majority would have been in favor after its introduction ex post. Moreover, if a majority is against road pricing ex ante, there will also be no majority for organizing an experiment that would take away the individual uncertainty. Second, political uncertainty with respect to the use of the revenues corroborates the finding that ex ante more voters will be against the introduction of tolls. Third, both types of uncertainty suggest that fewer voters are against road pricing when toll revenues are used to subsidize public transport than when they are redistributed to all voters. Importantly, the results of this paper are consistent with a number of recent empirical observations on efforts to introduce road pricing, including the systematic rejection of road pricing in referenda, the more favorable attitudes towards road pricing after than before its introduction, and tying the toll revenues to support public transport.     

Leblon Cachaça: A born global in a traditional industry

This case describes the trajectory of Leblon, a cachaça producer that since its inception regards the world as a market for its product. Founded by entrepreneurs in 2005, the firm's production process is divided between Brazil and France, and it serves several world markets besides the U.S. and Brazil. The company is a truly born global, and the most striking feature of the firm's strategy is super premium positioning. The case was developed based on interviews with the CEO and the head of operations, complemented by secondary information. The case is suitable for use in graduate courses that address issues relating to born globals, international entrepreneurship, and international marketing.     

Financial innovation: theoretical issues and empirical evidence in Italy and in the UK

In the first part of the paper, we try to clearly identify financial innovations and draw a general framework. Despite the relevance of financial innovations, a unique definition is difficult to find. We then provide empirical evidence of such innovations on a sample of Italian and UK listed banks over the period 2005–2007 using financial account data. First, the absence of any mention of a specific organizational unit in charge of research and development (R&D) is highlighted. However, the existence of a research and developmental function involving different organizational units cannot be excluded. Second, innovation seems to be mainly concentrated in the product area, both in Italy and in the UK. This could be accounted for by the difference in the “life cycles” of innovations and by the different operational conditions of banks in both systems. Third, larger banks seem more innovative, both in Italy and in the UK. No clear relation between innovation and cost reduction/revenue increase seems to exist, at least in Italy. In the light of the above considerations, policy implication comes to light on whether the choice of not establishing a specific organizational unit dedicated to R&D could turn out effective in the medium-long term.