Technology and incentive regulation in the Italian motorways industry

Making use of an original dataset containing information on 20 Italian motorways concessionaires over the 1992–2004 period, we study the technology prevailing in the motorways industry in Italy. We focus on the estimation of the technical progress for the years covered by our sample, and on the measurement of the economies of scale and density. We find that the industry has experienced significant technical progress and that there are sizeable economies of density and scale (at least up to a medium-large network size). These results provide valuable insights for regulatory purposes, notably for the definition of the optimal dimension of the network of a concessionaire and the correct setting of the X factor in the price cap formula, which is used to regulate the toll levels. We also control for the effects on the performance of the concessionaires due to the changes in the ownership structure and the regulatory regime, both introduced by the recent reform of the industry. We find that the productivity of the concessionaires has not increased with the adoption of a price cap regime, while it has benefited from the privatization process.      

ON THE LONG-TERM EFFECTS OF FISCAL POLICY IN THE UNITED KINGDOM: THE CASE FOR A GOLDEN RULE

This paper uses the SVAR methodology to investigate the effects of public investment on GDP and, more specifically, the effects of the introduction of a golden rule of public finance. We extend the existing literature by estimating a model for the British economy that takes into account long-run factors such as public debt accumulation and policy interactions. We find that in such a long-run framework, public investment has a significant and permanently positive effect on GDP; this result runs counter to the most recent literature on the topic using SVAR, which was limited to a short-run specification. We further find, by comparing different subsamples, that the introduction of the golden rule in 1997 strengthened the positive effect of public investment.     

Shifts in autonomy, responsibility and control from centre to periphery in public administration: the case of the ministry of finance in Italy

In tackling administrative reform and in the hope of improving the effective allocation of resources, most European governments have shown a growing interest in adopting private sector management models in the public administration. The assumption underlying this paper is that the decisive variables in the different national contexts have to do with the relationships between the central and the peripheral administrative levels, and the way in which administrative actors at the two levels interpret their roles and participate in the reform process. The paper examines the case of the reform of the Italian Ministry of Finance. In seeking to improve its performance and the services it provides, the ministry reform is intended to introduce a management system in which the key concepts are the planning, programming and control of administrative action and results. According to reform rhetoric, shaping a new class of administrative managers at the local level is the crux of the question. However, research results hint that the “creation” of this new local executive staff is yet to be completed. The working hypothesis advanced is that this is due to local executives’ lack of confidence in the “system”, inasmuch as the reform process has so far been characterised by a tendency to give them responsibility without autonomy and autonomy without control. The greater their lack of trust, the lesser their willingness to risk the consequences of failure and the greater their tendency to stick to defensive positions and to return to previous “bureaucratic” conceptions and ways of operating.     

A stochastic model to evaluate pricing distortions in indemnity insurance methods for MTPL insurance

Direct compensation or the direct reimbursement scheme is an indemnity insurance method that many European and American countries use to manage motor liability claims in which the driver that suffers an accident is paid by his/her insurance company that possibly later receives a flat-rate reimbursement (known as forfeit). Using non-life actuarial methodologies, this article analyses the distortion effects due to the direct compensation mechanisms and the effects of different forfeit reimbursement systems on policyholder tariffs in the management of motor liability claims involving vehicles in two different sectors, i.e. automobile and motorcycle. We empirically analyse and formalize the distortion effects resulting from the mechanism that different direct reimbursement systems produce, and explore the correlation between increasing tariffs for motorcycle policyholders and decreasing tariffs for other vehicle policyholders. We propose some alternative methods to overcome these distortion effects, evaluating their pricing impact through a stochastic model applied to a case study.

     

Does democracy affect taxation and government spending? Evidence from developing countries

Focusing on developing countries in three geographical areas (South-East Asia, Latin America and European Union), we explore the relation between political variables and tax revenue, public spending and their structure. We build a new dataset for the 1990–2005 period with fiscal, political and socio-economic variables. Since democracy is a complex and multidimensional concept, we measure it using two variables, the political strength of democratic institutions, and the protection of civil liberties. We perform three sets of estimates: (i) cross-country pooled OLS regressions with region fixed effects, (ii) country fixed effects regressions and (iii) region specific regressions with country fixed effects. While the first model delivers some significant correlations between political variables and tax items, when controlling for country fixed effects we find that tax revenue and tax composition are in general not significantly correlated with the strength of democratic institutions and the protection of civil liberties. The only exceptions are indirect, trade and property taxes. A similar result applies to public spending, with the exception of defense expenditure. Overall, our findings cast some doubt on the exact public policy channels through which political institutions affect economic development.     

The deterrent effects of the penalty points system for driving offences: a regression discontinuity approach

Using data on road accidents, traffic fatalities and driving offences taking place in Italy over the period 2001–2005, we estimate the effects of the introduction on July 2003 of a penalty points system for driving offences. To identify the causal effect of the penalty points system (PPS) on road safety we use a regression discontinuity design. It emerges that, controlling for weather conditions, police patrols, speed cameras, gasoline price, unemployment rate, the introduction of the PPS has led to a reduction of about 9 % of road accidents and of about 30 % of traffic fatalities. These findings are robust to different specifications of the model and different time windows. Moreover, it emerges that the driving offences for which the introduction of the new regime has determined a sharp change in the sanction scheme have reacted more than offences for which the change was less relevant.     

Role of home and host country innovation systems in r&d internationalisation: a patent citation analysis

This paper has three novelties. First, we argue that any given R&D facility’s capacity to exploit and/or augment technological competences is a function not just of its own resources, but the efficiency with which it can utilise complementary resources associated with the relevant local innovation system. Just as asset-augmenting activities require proximity to the economic units (and thus the innovation system) from which they seek to learn, asset-exploiting activities draw from the parent’s technological resources as well as from the other assets of the home location’s innovation system. Furthermore, we argue that most firms tend to undertake both asset exploiting and augmenting activities simultaneously. Second, we use patent citation data from the European Patent Office to quantify the relative asset augmenting vs. exploiting character of foreign-located R&D. Third, we do so for European MNEs located in the US, as well as US MNEs located in Europe. Our results indicate that both EU (US) affiliates in the US (EU) rely extensively on home region knowledge sources, although they appear to exploit the host country knowledge base as well.     

Credit constraints in Italian industrial districts

Italy is characterized by strong differences both in the productive and in the financial structure. Small and medium firms tend to concentrate in the so called ‘Marshallian industrial district’, whose productive system has been thoroughly studied but whose financial features are partially overlooked. This paper aims at investigating how the location of a firm in an industrial district affects its ability to resort to external finance, mostly bank loans. The econometric analysis on a panel of 1700 firms over the 1989–1995 period shows that firms located inside industrial districts have an advantage in terms of financial relations with the banking system: both the cost of credit and the probability to face financial constraints are lower. Nevertheless, the cyclical pattern of this advantage is not in favour of district firms: following the tightening of monetary policy, increases in interest rates on bank loans are proportionally higher for firms inside the district; furthermore, also the advantage consisting in an easier access to credit market disappears after the 1992–1993 recession.     

A micro-econometric analysis of the role of R&D spillovers using a nonlinear translog specification

This paper assesses the impact of Research and Development (R&D) spillovers on production for a panel of 1,203 Italian manufacturing firms over the period 1998–2003.The estimations are based on a nonlinear translog production function augmented by a measure of R&D spillovers which combines the geographical distance between firms, the technological similarity within each pair of firms and the technical efficiency of each firm. The estimation method takes into account the endogeneity of regressors and the potential sample selection issue regarding the decision by firms to invest in R&D. Results show that the translog production function is more suitable than the Cobb-Douglas for modelling firm behaviour and that returns to scale are increasing. Moreover, the internal and external stocks of technology exert a significant impact on firms’ production. Finally, it emerges that, for Italian manufacturing firms, R&D capital and R&D spillovers are highly substitutes.