Volatility, Stabilization and Union Wage-setting: The Effects of Monetary Policy on the 'Natural' Unemployment Rate

In a unionized economy with nominal-wage contracts, the 'natural' (rational-expectations equilibrium) employment level is not invariant with respect to the stabilization rule followed by the monetary authority. This is because alternative monetary policies change the variance of the inflation rate (price level) relatively to the variance of some measure of economic activity (employment level), thereby influencing the trade-off desired by union members between the real wage and the probability of employment. Indeed, a more volatile employment level induces the (risk-neutral) union members to prefer a higher expected real wage.
(J.E.L: E5, J5).     

Unbalanced Growth and the Sustainability of the Current Account Deficit

In an endogenous growth framework, a two‐country economy is modeled with an integrated product and asset markets. The countries differ with respect to the share of their GDP that is redistributed through the fiscal system, and the country where this share is smaller tends to grow faster. This high‐growth country finances a portion of its investment expenditures by attracting funds from the low‐growth country, whose growth rate is depressed by this outflow. The high‐growth country runs ever‐increasing current account deficits and its negative net international investment position rises without bounds. This notwithstanding, sustainability is guaranteed.     

Lipschitz continuous policy functions for strongly concave optimization problems

We prove that the policy function, obtained by optimizing a discounted infinite sum of stationary return functions, is Lipschitz continuous when the instantaneous function is strongly concave. Moreover, by using the notion of α-concavity, we provide an estimate of the Lipschitz constant which turns out to be a decreasing function of the discount factor.     

A generalization of an inequality on binomial coefficients

A generalization of an inequality on binomial coefficients solved by E. L. Johnson, D. Newman, K. Winston [1] is analyzed and at the worst the problem is reduced into the choice between two alternatives for the solutions. Supported by G.N.A.F.A. of the Consiglio Nazionale delle Ricerche.     

Technological regimes and demand structure in the evolution of the pharmaceutical industry

This paper examines how the nature of the technological regime governing innovative activities and the structure of demand interact in determining market structure, with specific reference to the pharmaceutical industry. The key question concerns the observation that—despite high degrees of R&D and marketing-intensity—concentration has been consistently low during the whole evolution of the industry. Standard explanations of this phenomenon refer to the random nature of the innovative process, the patterns of imitation, and the fragmented nature of the market into multiple, independent submarkets. We delve deeper into this issue by using an improved version of our previous “history-friendly” model of the evolution of pharmaceuticals. Thus, we explore the way in which changes in the technological regime and/or in the structure of demand may generate or not substantially higher degrees of concentration. The main results are that, while technological regimes remain fundamental determinants of the patterns of innovation, the demand structure plays a crucial role in preventing the emergence of concentration through a partially endogenous process of discovery of new submarkets. However, it is not simply market fragmentation as such that produces this result, but rather the entity of the “prize” that innovators can gain relative to the overall size of the market. Further, the model shows that emerging industry leaders are innovative early entrants in large submarkets.     

Peer punishment in teams: expressive or instrumental choice?

A key question about human societies is how social norms of cooperation are enforced. Subjects who violate norms are often targeted by their peers for punishment. In an experiment with small teams we examine whether subjects treat punishment itself as a second-order public good. Results do not support this view and rather suggest a hard-wired taste for punishment; subjects are engaged in a cooperative task but ignore the public good characteristics of punishment.     

The role of human capital in identifying the drivers of product and process innovation: empirical investigation from Italy

Quality & Quantity - Economists recognize that the local availability of higher human capital represents significant knowledge spillovers, especially for innovation process. This research...     

Production Theory: Accounting for Firm Heterogeneity and Technical Change

The paper presents a new framework to assess firm level heterogeneity and to study the rate and direction of technical change. Building on the analysis of revealed short‐run production functions by Hildenbrand ( 1981 ), we propose the (normalized) volume of the zonotope composed by vectors‐firms as indicator of inter‐firm heterogeneity. Moreover, the angles that the zonotope's main diagonal form with the axes provide a measure of the rates and directions of productivity change. The proposed framework also accounts for n‐inputs and m‐outputs and, crucially, the measures of heterogeneity and technical change do not require many of the standard assumptions from production theory.