Profit taxation and capital accumulation in a dynamic oligopoly model

We illustrate a differential oligopoly game using the capital accumulation dynamics à la Ramsey. We evaluate the effects of profit taxation, proving that there exists a tax rate yielding the same steady state social welfare as under social planning. Contrary to the static approach, our dynamic analysis shows that, in general, profit taxation affects firms’ decisions concerning capital accumulation and sales. In particular, it has pro-competitive effects provided that the extent of delegation is large enough (and conversely).     

Would the Bundesbank have prevented the Great Inflation in the United States?

Policy counterfactuals based on estimated structural VARs routinely suggest that bringing Alan Greenspan back in the 1970s United States would not have prevented the Great Inflation. We show that a standard policy counterfactual suggests that the Bundesbank—which is near-universally credited for sparing West Germany the Great Inflation—would also not have been able to prevent the Great Inflation in the United States.The implausibility of this result sounds a cautionary note on taking the outcome of SVAR-based policy counterfactuals at face value, and raises questions on the reliability of such exercises.     

Social science and neuroscience: how can they inform each other?

Recent research indicates that an interdisciplinary approach bridging the gap between social science and neuroscience is a key factor for obtaining a better understanding of individual decision making and social phenomena. This paper focuses on reciprocal fairness as a paradigmatic interdisciplinary case study. We discuss the recent behavioral evidence on reciprocity, identifying several unanswered questions. We then review the relevant neuroeconomic evidence about reciprocal preferences, mind reading and empathy.     

Employability and mental health in dismissed workers: the contribution of lay-off justice and participation in outplacement services

The current study’s explored if and how psychosocial resources of employability contribute to mental health of dismissed workers. Degree of outplacement services use, perceived employability and perceived organizational lay-off justice were examined as mediators of the relation between personal employability and mental health. The research involved dismissed workers in the pharmaceutical industry, who joined programs of re-employment sponsored by companies. Structural equation results showed that the lay off workers with higher personal employability were less likely to have mental health deterioration. Furthermore psychosocial resources of personal employability directly increased perceptions of having job available alternatives and was indirectly associated with a higher degree of use of outplacement programs, but these variables didn’t mediate the relation with mental health. Lay-off justice had a direct positive impact on mental health, but it was not relate with employability. Our study contributes to understand some psychological processes that can affect the decision to utilise outplacement programs and offers suggestions for employability profiling.     

PUBLIC EDUCATION, FERTILITY INCENTIVES, NEOCLASSICAL ECONOMIC GROWTH AND WELFARE

Using a simple overlapping generations model of neoclassical growth, we analyse the effects of both child allowances and the system of public education on the rate of fertility, the per capita income and the individual lifetime welfare. The essential message of the present paper is that developed countries plagued by below-replacement fertility and income stagnation may raise per capita income and the rate of fertility at the same time by increasing the public education expenditure rather than by resorting to child allowances. The latter, in fact, are found to be harmful for long-run neoclassical economic growth and, in contrast with the common belief, for the rate of population growth as well. Moreover, welfare analysis has shown the existence of a Pareto-efficient welfare-maximizing educational contribution rate.     

Real business cycle models of the Great Depression

The Great Depression of the 1930s is again on the frontier of research in macroeconomics. Researchers working in the real business cycle (RBC) tradition have recently started to apply their theoretical apparatus to the event. This paper discusses the result of their work and assesses the role of history and macroeconomics in analysing the Great Depression. I argue that the breaking of the depression taboo in macroeconomics has been a desirable completion of the cliometric revolution: no historical event should be exempt from a dispassionate quantitative analysis. On the other hand, the substantive contribution of RBC models is not yet sufficient to establish a new historiography of the Great Depression.     

Sharing risk and ambiguity

We study the market implications of ambiguity in common models. We show that generic determinacy is a robust feature in general equilibrium models that allow a distinction between ambiguity and risk.     

Regional consumption dynamics and risk sharing in Italy

In this paper, we propose a new method for investigating consumption insurance. Differently from the existing literature, we use error correcting VAR models in order to capture simultaneously the occurrence of risk sharing against permanent and transitory shocks. The proposed method is applied to the case of Italian regions. Empirical results obtained over the 1960–2001 period reveal that contrary to previous findings, Italian regions seem to shield against permanent shocks other than transitory ones. Although some biases are detected in the allocation process of resources, deviations from full consumption insurance are not as relevant as claimed in the previous literature on the Italian regions.     

Endogenous transportation technology in a Cournot differential game with intraindustry trade

We investigate a dynamic Cournot duopoly with intraindustry trade, where firms invest in R&D to reduce the level of iceberg transportation costs. We adopt both open-loop and closed-loop equilibrium concepts, showing that a unique (saddle point) steady state exists in both cases. In the open-loop model, optimal investments and the resulting efficiency of transportation technology are independent of the relative size of the two countries. On the contrary, in the closed-loop case firms’ R&D incentives are driven by the relative size of the two countries. Policy implications are also evaluated.     

INTELLECTUAL PROPERTY MEETS ECONOMIC GEOGRAPHY: GLOBALIZATION, INEQUALITY, AND INNOVATION STRATEGIES

I perform a Schumpeterian analysis of a world economy in which heterogenous individuals and firms endogenously respond to stronger global competition by undertaking more education and by spending more in research and development (R&D). A more globalized economy is predicted to exacerbate wage inequality, but to spur human capital accumulation within each country. However, despite its positive level effects on consumption and output, globalization can reduce each country's per-capita output growth rate. R&D specialization allows each country to positively invest in manufacturing, variety proliferation R&D, and product quality upgrading R&D. The existence of such an R&D specialization – jointly with domestic size – allows us to explain some different economic performance about inequality and R&D effort of developed regions, such as the US and the EU countries.