The Phasing of Fiscal Adjustments: What Works in Emerging Market Economies?

This paper investigates the political and economic determinants of successful fiscal adjustment in 25 emerging market economies from 1980 to 2001. The results show that large and back‐loaded fiscal adjustments have the highest likelihood of success. Fiscal consolidations based on expenditure cuts increase the probability of approaching and achieving fiscal sustainability but are insufficient to maintain it unless accompanied by revenue reforms. Adjustment episodes launched in countries where governments enjoy a parliamentary majority and do not face imminent elections, are found to be more successful. Fiscal consolidations undertaken under IMF‐supported programs also have a higher probability of success.     

Wage bargaining and vertical differentiation

This paper applies the Nash Bargaining solution to wage setting in a vertically differentiated oligopoly and studies its welfare effects. The market outcome crucially depends on the bargaining power attributed to the agents. I show that the wage bargaining structure is likely to lead to another source of inefficiency that adds to the classical one derived by oligopoly pricing and quality choice. (JEL: L11, J51)     

Sustainability report in small enterprises: case studies in Italian furniture companies

The recent evolution of the economic and social context has led enterprises to consider and assess corporate environmental and social impacts integrated with the traditionally measured economic and operating performances. From this point of view, the international debate on the advantages given by the firms' adoption of socially responsible behaviour has been developed; the increasing consciousness of the social character in enterprises' activities has enlarged the interest in communication. For this reason, several different standards have been developed in order to transmit, to the stakeholders, data, information and approaches about environmental, social and sustainability topics related to the firm's activities. In this dynamic context, the features of SMEs require specific guidelines, which address the contents of an SME‐oriented sustainability report. In this perspective the aim is to design guidelines able to meet with these SMEs' requirements; seven case studies, on Italian furniture small enterprises, complete the study. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

Project analysis using a linear approach (P.A.U.L.A.)

We define a general model (called PAULA) for the valuation, optimal management and selection among mutually exclusive safe projects. By exploiting the formal and financial features of the associated linear problems (primal and dual), we put forward two proposals to define an optimal internal financial law (IFL). They may be used to reduce the multiplicity of the IFLs and to avoid economically arbitrary outcomes.Research projectsCariplo andMurst.     

Spatial spillovers in emerging market spreads

We use novel spatial econometrics techniques to explore spillovers in the sovereign bond market for 24 emerging economies during 1995–2010. The article extends the previous literature focusing on spillover effects from advanced to emerging economies by analyzing transmission of shocks across emerging markets. After controlling for the impact of global factors, we find strong evidence of spillovers from both sovereign spreads and macroeconomic fundamentals in neighboring emerging economies. In addition to the geographical proximity, the channels of spatial transmission include trade and financial linkages. The results of the article highlight the importance of accounting not only for spillovers from advanced economies to emerging markets but also across emerging markets when analyzing sovereign spreads.     

Privatisation and aggregate output: testing for macroeconomic transmission channels

In this paper we examine empirically the impact of privatisation on output in the UK, through macroeconomic transmission channels. While most privatisation studies focus on microeconomic shocks, namely at the firm level, we are interested to see whether a large scale privatisation policy, as the one pursued in the UK in the 1980 and 1990s, had a measurable impact on output. This may contribute to the ex post evaluation of this policy and complement the microeconomic evidence. We use quarterly data from 1979 to 1998 of privatisation proceeds, as our impulse policy variable, and of private consumption, gross fixed capital formation, net government expenditures, as transmission channels, and aggregate output as our final response variable. The econometric methodology is based on Structural Vector Auto-regressive models and Impulse Response Functions. Non-stationarity and cointegration properties of the time series have also been considered. We find that privatisation shocks do not have an impact in the consumption-output model, but have a moderate and transitory impact in the investment and the public expenditures models. Such positive demand effects, however, have not been completely matched by supply side effects, and, consequently, privatisation in the UK did not contribute to a sustained economic growth.

Individual Differences in the Disposition Effect

The authors model the role of personality traits in explaining the disposition effect building on realization utility theory and Big 5 model and moving from an aggregate level to interindividual differences. The experimental analysis, combining NEO Revised Personality Inventory measures with individual financial data from a trading simulation run by 230 individuals in China and Italy, shows that the disposition effect is driven by 2 distinct psychological processes, one related to holding losers and the other to selling winners. These 2 behavioral mechanisms are uncorrelated and influenced by different personality traits. Controlling for different demographic variables, the authors show (a) a greater sensitivity of the rewarding system that motivates “extroverts” to quickly sell the stock at gain to receive a burst of utility; (b) a tendency for “conscientious” subjects to suppress impulsivity, patiently waiting for higher cumulative returns; and (c) the importance of “openness to experience” to better value information to achieve higher outcomes.     

A simple model of vertical search engines foreclosure

By means of a simple model with consumers' search, the paper analyzes a monopolistic general search engine incentives to bias organic and sponsored search results in order to favor an integrated website. In the model, manipulation takes place whenever the general search engine places prominently its own vertical search engine instead of the most relevant for consumers. The main finding is that the incentives to manipulate search results are stronger in the organic search case. In the sponsored search case the general search platform internalizes the impact of manipulation on profits, since the less a prominent vertical search engine is relevant to consumers, the lower is the price-per-click that the general search engine can charge.