Bank profitability and the business cycle

An important element of the macro-prudential analysis is the study of the link between business cycle fluctuations and banking sector profitability and how this link is affected by institutional and structural characteristics. This work estimates a set of equations for net interest income, non-interest income, operating costs, provisions, and profit before taxes, for banks in the main industrialized countries and evaluates the effects on banking profitability of shocks to both macroeconomic and financial factors. Distinguishing mainly the euro area from Anglo-Saxon countries, the analysis also identifies differences in the resilience of the respective banking systems and relates them to the characteristics of their financial structure.     

The determinants of academic spin‐off creation by Italian universities

The aim of this work is to investigate the university level determinants of academic spin‐off (ASO) firm creation in Italy. We are interested in particular in the relationship between university funding and the university propensity to create spin‐offs, and test the effect of public and third‐party funds on this tendency. We estimate the effect of several variables for the characteristics of the university and the context. In contrast to our expectations, results indicate that third‐party funding does not exert an effect on the propensity of the university to generate ASO firms. Similarly, and in contrast to what the literature suggests, scientific productivity, context innovativeness and patenting experience also do not have a positive and significant effect on the propensity to generate spin‐offs. We find that ASO creation is influenced by the amount of public income, by past experience in creating spin‐offs and by the presence of a technology transfer office. This work contributes to our understanding of the differences between Italy and the Anglo‐Saxon countries in relation to the phenomenon of ASO creation and has some important implications for policy.     

Social protection 2.0: Exploring issues, evidence and debates in a globalizing world

This paper reviews the growing literature on social protection. While not new, the concept evolved remarkably in recent years. It is approached from a multitude of perspectives, and intersects with broader bodies of literature – particularly around public policy, pro-poor growth, rights, humanitarian strategies, and aid effectiveness – as well as feeding into specific programmatic issues (e.g. conditionality, targeting and transfer selection). This blend of challenges and approaches has often made debates elusive and polarized. The paper examines the evolution and definitions of social protection, and unbundles critical policy, institutional and implementation quandaries. Taken together, these considerations shape a set of context-specific models of social protection. The paper’s five core conclusions may help chart future directions for social protection research and practice.     

Primates’ fertilization systems and the evolution of the human brain

Since the time of Darwin and Wallace, the origin of the human brain has been a controversial issue in evolutionary biology. The development of the human brain has been a matter of dispute between those who attribute it to the forces of natural selection and those who emphasize the role of sexual selection. Building on Darwin’s original insights, in this paper we argue that the uniquely human cognitive capabilities are likely to have been initially spurred by sexual selection. We consider the incentive properties of fertilization systems and, pursuing this ‘economic’ perspective, we compare human gender relations with those of other primates. We argue that, because of its potential egalitarian nature and its consequent quasi-monogamic gender relationships, the human fertilization system is much more likely to have given selective advantages to investments in emotional and rational intelligence, thus favoring the development of many fundamental human capabilities. Even if our brain was initially spurred by sexual selection, after some time, unlike the famous case of the peacock’s tail, it proved extremely useful also in the domain of natural selection. Thus, differently from explanations based on the effects of either natural or sexual selection alone, we show that favorable selection complementarities may have had a crucial role in the evolution of the human brain.      

Bank ownership and performance. Does politics matter?

This paper uses a new dataset to reassess the relationship between bank ownership and bank performance, providing separate estimations for developing and industrial countries. It finds that state-owned banks located in developing countries tend to have lower profitability and higher costs than their private counterparts, and that the opposite is true for foreign-owned banks. The paper finds no strong correlation between ownership and performance for banks located in industrial countries. Next, in order to test whether the differential in performance between public and private banks is driven by political considerations, the paper checks whether this differential widens during election years; it finds strong support for this hypothesis.     

Applying the biological evolution metaphor to technological innovation

A synthetic theory of evolution is taken as representing the metaphor for the process of innovation. The model is employed to highlight major characteristics of changes in technological innovation and in the time phasing of industrial inventions and innovations. Analysis at the level of the industrial sector is used as a heuristic example of the metaphor, with a focus on innovations in the car industry. Forecasting future products is seen as related to materials requirements, primary human needs and the role of the service sectors.     

Electoral Rules, Political Systems, and Institutional Quality

This paper explores the links between political rules and institutional quality. The paper concentrates on two political measures: the presence of checks and balances in the political system and an index of political particularism that measures the incentives for politicians to build personal support bases. The paper finds a positive correlation between checks and balances and institutional quality. It also finds that intermediate levels of particularism are associated with higher institutional quality.     

Nationalism, development and integration: the political economy of Ernest Gellner

In this paper, we show how in Gellner we can find a stimulatinganalysis of the institutional equilibria that characterise agrarianand industrial society and the conditions that make possibleinstitutional change from one equilibrium to another. This allowsa convincing account of the reasons why some countries industrialisedbefore others and why nationalism had such an uneven impacton the development of market economies. We consider the relationbetween Gellner's analysis and other theories of organisationand point out how Gellner can help to solve some paradoxes thatarise in these theories. We also argue that joining Gellner'scontribution to the analysis of the positional nature of statusand power reinforces his conclusion about the necessary stagnationof agrarian societies and the necessary (over)accumulation ofdifferent forms of capitalism. We conclude by examining theimplications of his analysis for the process of globalisationand its challenge to national states.     

Using a Microeconometric Model of Household Labour Supply to Design Optimal Income Taxes*

With regards to empirical applications of optimal taxation theory, analytical expressions are typically adopted for optimal taxes, and then numerical values are imputed to their parameters by calibration or by using previous estimates. We aim to avoid the restrictive assumptions and possible inconsistencies of this approach. In contrast, we identify optimal taxes by iteratively running a microeconometric model, based on 1994 Norwegian data, until a given social welfare function is maximized, given the public budget constraint. The optimal rules envisage monotonically increasing marginal rates (negative on very low incomes) and – compared to the current rule – a lower average rate, lower marginal rates on low incomes, and higher marginal rates on very high incomes.