Tiebout with Politics: Capital Tax Competition and Constitutional Choices

This paper examines how capital tax competition affects jurisdiction formation. We describe a non-cooperative locational model of public goods provision choices, where the levels of taxation and the local public good varieties provided within jurisdictions are selected by majority voting, and where equilibrium jurisdictions consist of consumers with similar tastes. We show that interjurisdictional tax competition results in an enlargement of jurisdictional boundaries, and, even in the absence of intrajurisdictional transfers, can raise welfare for all members of a jurisdiction.     

Lab and framed lab versus natural experiments: Evidence from a risky choice experiment

Some recent papers have studied data from TV game shows to examine the behaviour of individuals towards risk. It is generally agreed that data from these shows are useful in detecting individual risk aversion in the field, with both “real life” subjects and incentives. Field experiments also include some interesting reality features that could affect individuals’ behaviour and possibly lead to different findings. This paper aims at investigating lab versus field evidence in risk taking attitudes, especially controlling for framing effects. To assess whether the behaviour of subjects in the field is consistent with that of experimental subjects, we designed an experiment to mimic (with experimental rewards and subjects) the rules of a well-known Italian TV game show, Affari Tuoi, in two different settings: a traditional lab setting, where the game was played individually (109 subjects) (Treatment 1); and a framed lab, in which the experiment was replicated in the Italian public television (RAI) studio where the show was actually recorded, with a smaller sample of undergraduate students (33) and in the presence of an audience (Treatment 2). Our comparison between the two different settings aims at establishing whether the presence of an audience, or of a situation that reproduces the stress that contestants must experience in the TV studio, can affect experimental subjects’ choices. We did not find any significant evidence of framing effects: students behave in a similar way in the two lab settings, responding essentially to incentives. Comparing the risk attitudes shown by experimental subjects in the two lab treatments with those exhibited by the contestants in the field, we found that contestants in the TV show are generally more risk averse than students in the lab.     

Lost in translation: exploring the link between HRM and performance in healthcare

Using data collected in 2004 from 132 Victorian (Australia) public healthcare providers, comprising metropolitan and regional hospital networks, rural hospitals and community health centres, we investigated the perceptions of HRM from the experiences of chief executive officers, HR directors and other senior managers. We found some evidence that managers in healthcare organisations reported different perceptions of strategic HRM and a limited focus on collection and linking of HR performance data with organisational performance management processes. Using multiple moderator regression and multivariate analysis of variance, significant differences were found in perceptions of strategic HRM and HR priorities between chief executive officers, HR directors and other senior managers in the large organisations. This suggested that the strategic human management paradigm is ‘lost in translation’, particularly in large organisations, and consequently opportunities to understand and develop the link between people management practices and improved organisational outcomes may be missed. There is some support for the relationship between strategic HRM and improved organisational outcomes. Implications of these findings are drawn for managerial practice.     

The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004

We construct estimates of external assets and liabilities for 145 countries for 1970-2004. We describe our estimation methods and key features of the data at the country and global level. We focus on trends in net and gross external positions, and the composition of international portfolios. We document the increasing importance of equity financing and the improvement in the external position for emerging markets, and the differing pace of financial integration between advanced and developing economies. We also show the existence of a global discrepancy between estimated foreign assets and liabilities, and identify the asset categories accounting for this discrepancy.     

External liabilities and crises

We examine the determinants of external crises, focusing on the role of foreign liabilities and their composition. Using a variety of statistical tools and comprehensive data spanning 1970–2011, we find that the ratio of net foreign liabilities to GDP is a significant crisis predictor. This is primarily due to the net position in debt instruments—the effect of net equity liabilities is weaker and net FDI liabilities seem, if anything, an offset factor. We also find that: i) breaking down net external debt into its gross asset and liability counterparts does not add significant explanatory power to crisis prediction; ii) the current account is a powerful predictor; iii) foreign exchange reserves reduce the likelihood of crisis more than other foreign asset holdings; and iv) a parsimonious probit containing those and a handful of other variables has good predictive performance in- and out-of-sample. The latter result stems largely from our focus on external crises sensu stricto.     

The demand for tobacco in post-unification Italy

This paper studies the demand for tobacco products in post-unification Italy. We construct a very detailed panel data set of yearly consumption in the 69 Italian provinces from 1871 to 1913 and use it to estimate the demand for tobacco products. We find support for the Becker and Murphy (J Polit Econ 96:675–700, 1988) rational addiction model. We also find that, in the period considered, tobacco was a normal good in Italy: aggregate tobacco consumption increased with income. Subsequently, we consider separately the four types of products which aggregate tobacco comprises (fine-cut tobacco, snuff, cigars, and cigarettes), and tentatively suggest that habit formation was a stronger factor on the persistence of consumption than physical addiction. The paper ends by showing that the introduction of the Bonsack machine in the early 1890s did not coincide with changes in the structure of the demand for tobacco, suggesting cost-driven technological change.     

Risk and Crisis Management in the Reformed European Agricultural Policy

Currently there is ample discussion among EU Institutions (European Commission, European Parliament, and Member States' governments) on the opportunity for setting up a comprehensive EU‐wide framework on risk and crises in agriculture. In the meantime, within the limits of the WTO rules on agriculture, national governments are allowed to intervene through direct compensation to farmers in case of exceptional events that cause damages to farming operations and through subsidies to crop insurance programs. Such schemes are quite expensive for domestic budgets and some Member States are trying to switch some of their cost to the Community's budget, although an expansion of financial resources devoted to agriculture in Europe is rather unlikely. Moving from the recently emanated proposal of the European Commission, this paper discusses the main issues related to public intervention for risk and crises management in agriculture. Actuellement, les institutions européennes (Commission européenne, Parlement européen et gouvernements des pays membres) discutent intensément de l'opportunité d'élaborer un cadre général pour l'ensemble de l'Union européenne sur les crises et les risques dans le secteur agricole. Entre‐temps, selon les règles de l'OMC sur l'agriculture, les gouvernements nationaux peuvent intervenir en accordant des compensations financières directes aux agriculteurs en cas de circonstances exceptionnelles causant des dommages aux exploitations agricoles ainsi que des subventions aux programmes d'assurance récolte. Ces interventions amputent considérablement les budgets nationaux, et certains pays membres tentent de transférer une partie de leurs coûts au budget de l'Union européenne, bien qu'il soit peu probable que les ressources financières consacrées à l'agriculture en Europe augmentent. A la lumière de la récente proposition de la Commission européenne, le présent article traite des principaux thèmes liés à l'intervention publique dans la gestion des risques et des crises dans le secteur agricole.     

On the statistical identification of DSGE models

Dynamic Stochastic General Equilibrium (DSGE) models are now considered attractive by the profession not only from the theoretical perspective but also from an empirical standpoint. As a consequence of this development, methods for diagnosing the fit of these models are being proposed and implemented. In this article we illustrate how the concept of statistical identification, that was introduced and used by Spanos [Spanos, Aris, 1990. The simultaneous-equations model revisited: Statistical adequacy and identification. Journal of Econometrics 44, 87–105] to criticize traditional evaluation methods of Cowles Commission models, could be relevant for DSGE models. We conclude that the recently proposed model evaluation method, based on the DSGE–VAR(λ)$\left(\lambda \right)$, might not satisfy the condition for statistical identification. However, our application also shows that the adoption of a FAVAR as a statistically identified benchmark leaves unaltered the support of the data for the DSGE model and that a DSGE–FAVAR can be an optimal forecasting model.     

Distributional Effects of Price Reforms in the Italian Utility Markets*

In this paper, we analyse some distributional effects of the reforms to water and energy services in Italy. We first document the new regulation setting in these services, illustrating the dynamics of utility prices and of household expenditure in the period 1998‐2005. We then propose a way to measure the affordability of public utilities, in order to investigate how many households would incur a potentially excessive burden if they consumed a minimum quantity of utility services. Finally, we calculate this index on data from the Survey on Family Budgets (Indagine sui consumi delle famiglie). Our results show how the affordability of utility bills varies from region to region depending on climate, income, family endowment and family size. The analysis ‐ also based on a counterfactual exercise ‐ finds that so far, utility reforms do not seem to have produced any negative effects on weaker households.     

Stock Returns,Productivity, and Corruption in Eight European Fast-Emerging Markets

This article addresses the impact of productivity, corruption, and trade openness on the stock returns of 265 industrial companies listed in eight Eastern European fast-emerging markets, over the 2004-2013 period. Through a three-factor model that includes both measures at firm level and macro-level control variables, our findings suggest that country corruption index is negatively correlated with the total annual return of the stocks of the listed industrial companies of our sample. Moreover, the most productive firms are featured by higher stock returns, while leverage seems not to be a key predictor of stock returns. In addition, the article uncovers innovative evidence about trade openness that is negatively correlated with stock returns due to its connection with the recent financial crisis. That is, firms operating in markets that are more open to trade show a higher degree of interconnection with other economies and are more likely to undergo the effects of negative fluctuations from foreign markets during the economic crisis. © 2015 Wiley Periodicals, Inc.