Does trade credit redistribution thwart monetary policy? Evidence from Italy

Italy is an ideal candidate for testing the credit view of the transmission mechanism because of a bank-centred financial structure, a sizeable trade debt, and an economy titled towards small firms. An empirical analysis of trade credit and debt on averaged panel data shows that small firms act as financially constrained and cycle-sensitive, whereas large ones aim at smoothing sales, adopt an integrated management of inventories and receivables and have a higher trade debt to purchases elasticity. On balance, the net trade credit channel does not, as implied by the credit view, shield small firms from a monetary squeeze.     

The Academic Mind and the Rise of U.S. Imperialism: Historians and Economists as Publicists for Ideas of Colonial Expansion

A bstract . The role of American learned societies in developing support for an American colonial foreign policy has been neglected. Evidence indicates that American learned societies, in the period following the Spanish-American War from 1898 to 1901, were intellectually predisposed toward an imperial policy. The debates within the American Historical Association , the American Economic Association , and the American Academy of Political and Social Science are described and analyzed. Each learned society abandoned the ivory tower" and mixed in impassioned politics. The "imperial" interpretation led historians to endorse empire as salutary; economists endorsed the role of the State in building markets for domestic production; and prevailing Social Darwinistic views of political economy led the Academy of Political and Social Science to support an activist, acquisitive foreign policy as necessary to the national interest. Dissident, anti imperialist scholars as well as skeptical scholars could not turn the imperial mood of these societies.     

Structural breaks in the lending interest rate pass-through and the euro

This paper investigates whether size and speed of the pass-through of market rates into short term business lending rates have increased in the wake of the introduction of the euro. Allowing for multiple unknown structural breaks we find two in four EMU countries, and in the UK as well, and a single one in five other countries. The pattern of dates fits national banking systems adjusting slowly to the new monetary regime and suggests caution in associating structural changes to the introduction of the euro. The estimated equilibrium pass-through in the last break-free period is on average more incomplete, hinting at a reduced effectiveness of the single monetary policy. These results run against the economic intuition that a reduced volatility in money market rates is bound to mitigate uncertainty and to ease therefore the transfer of policy rate changes to retail rates; the run-up to Basel 2 and a deterioration of competition in loan markets could be the motivations. Caution in extrapolating these findings to recent periods is suggested by the differences between the unharmonized and the new harmonized retail rates.     

The role of legal status in influencing bank financing and new firm growth

We provide an empirical assessment of the suggestion, based on Severo (2012), to use a systemic liquidity risk index (SLRI) for estimating liquidity premia that could be charged on large banks as a compensation for the implicit liquidity support obtained from public authorities (Blancher et al., 2013). To this end we compute, over the period January 2004–December 2012, a parsimonious and fully documented SLRI. We also investigate its statistical significance in explaining the level and variability of stock returns for a group of large international banks across the subprime and the Eurozone sovereign debt crises. Main findings are two: our more parsimonious SLRI is close to Severo’s but provides a stronger signal of liquidity stress and recovery episodes; we consistently fail to detect, within and across the two crises, a stable group of banks among the global systemically important ones listed by the Financial Stability Board.