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Some harm reduction strategies encourage individuals to switch from a harmful addictive good to a less harmful addictive good. This approach is controversial, with advocates claiming it helps switching to a less harmful substance, and opponents claiming it may lead to new substance abuse. This paper builds on theories of addiction to model the introduction of a harm reduction method, and it demonstrates when each side is correct, depending on the enjoyableness of the harm reduction method, the addictiveness of the harm reduction method, and the substitutability with the original addictive good.

This paper studies how discriminatory fake news arises and spatially diffuses. We focus on India at the onset of the COVID-19 pandemic: on March 30, a Muslim convention (the Tablighi Jamaat) in New Delhi became publicly recognized as a COVID hotspot, and the next day, fake news on Muslims intentionally spreading the virus spiked. Using Twitter data, we build a comprehensive novel dataset of georeferenced tweets to identify anti-Muslim fake news. We find, in cross-sectional and difference-in-difference settings, that discriminatory fake news became much more widespread after March 30 (1) in New Delhi, (2) in districts closer to New Delhi, and (3) in districts with higher social media interactions with New Delhi. Further, we investigate whether deeply rooted historical factors may have also played a role in the diffusion of anti-Muslim fake news: we show that, after March 30, discriminatory fake news was more common in districts historically exposed to attacks by Muslim groups.

I study how schools impact student performance and educational attainment throughout secondary education, and show that school quality cannot be easily captured by any type of rankings because students with differing characteristics and abilities benefit from different school inputs. To do so, I estimate a dynamic structural model of cognitive skills accumulation and schooling decision using rich administrative data from middle schools in Barcelona. I then simulate the outcomes that each student would have achieved in every school in the sample. Notably, the school environment has a crucial impact on the educational attainment of students from less advantaged family background and low-ability students who are at greater risk of leaving school. Moreover, the schools that would yield the highest final test scores for these students – provided they do not drop out – are not the ones that would maximize their likelihood of graduating and enrolling in further education. The results suggest that evaluating and comparing schools using only standardized assessments is insufficient for serving the needs of disadvantaged students, who require schools that enhance educational attainment rather than just test scores.

This paper investigates the informational content of online reviews. For the case of hotels, we model how the length of the stay shapes the variance of review scores. Grounded on violations of temporal monotonicity, errors in recall and hedonic adaptation theories, we first present a characterization of how the consumption span affects the non-deterministic component of consumer satisfaction. Next, we conduct an empirical analysis using more than 525,000 individual reviews from Booking.com in 5 major European cities. Under a heteroskedastic framework, we document that individual ratings’ volatility decreases with the length of the stay. This implies that online ratings from short stayers (short consumption episodes) are noisy signals of the underlying hotel quality. Furthermore, we show that greater volatility in hotel ratings translates into a lower share of useful reviews for subsequent consumers. Our findings offer relevant insights for platform design operators about the sources of ratings’ volatility and how this affects social learning.

The utility associated with a service’s consumption is contingent on its intrinsic characteristics and various situational factors. One key element that influences consumer satisfaction is adherence to prior expectations. This is particularly relevant for experience goods that highly depend on external factors, such as weather. On these premises, the current study explores the role of expectations on utility by analyzing the effect of weather surprises (i.e., the mismatch between forecast and realized weather) on online ratings. Results from the analysis of over 300,000 reviews posted on Booking.com indicate that weather surprises have an impact on the reported experienced utility, the effect depending on the sign of the surprise. Moreover, the consumption span moderates the surprise effect, thereby mitigating the impact of both positive and negative surprises on utility.

In Experimental Economics, coordination games are used to elicit social norms as incentivized beliefs about others’ beliefs. Conversely, representative surveys like the World Values Survey elicit social norms as personal attitudes and values that are independent of others’ beliefs. Using a representative survey of the Italian population (N = 1, 501), we compare the two ways of measuring social norms with gender roles as a working example and find the following results. At the aggregated level, appropriateness ratings obtained under the two elicitation methods follow the same pattern but differ significantly in magnitude, with the incentivized social norm elicitation depicting a more conservative view on gender roles than the unincentivized one. The analysis carried out at the individual level allows us to explain the previous result. Most respondents report personal values as more progressive than the perceived norm, which may be consistent with a desirability and/or a self-image bias. This occurs irrespectively of whether respondents correctly perceive the social norm or not. We conclude that analyses based on personal values lead to a proxy of gender norms significantly more progressive than the norms elicited in coordination games.

Turnover is a key indicator of economic activity, but we know little about how much entrepreneurs adjust it as a response to taxation. This is because business taxation is usually based on profits, rather than turnover. This paper exploits the notch created by the eligibility cut-off of the preferential (turnover) tax regime for solo self-employed in Italy to study turnover responses to taxation. I find that solo self-employed bunch below the turnover threshold to be eligible for the preferential scheme. Effects are different in different sectors, with professionals and business intermediaries showing the largest responses. Then, I estimate the turnover tax elasticity by focusing on the (last) marginal buncher. To do so, I adapt the models of Kleven and Waseem (2013) and Harju et al. (2019) to derive a modified indifference condition that fits the institutional set-up. The baseline estimate for the turnover tax elasticity is 0.072.

This paper studies whether and how religious leaders affect politics. Focusing on Italian dioceses in the period from 1948 to 1992, we find that the identity of the bishop in office explains a significant amount of the variation in the vote share for the Christian Democracy party (DC). This result is robust to several exercises that use different samples and time windows. Zooming into the mechanism, we find that two characteristics of bishops matter: (i) his political culture, and (ii) his interaction with the population—the latter being measured using state-of-the-art text-analysis techniques.

Exploiting high-frequency data from the Italian anti-violence helpline, police reports of domestic abuse and maltreatments, and a unique geolocalized dataset on killings of women, we show that the news coverage of a femicide triggers an increase in help-seeking behavior. The effect is detectable in the period following the news and in the province where the femicide has occurred. Additionally, help-seeking increases more when the general interest and news coverage are higher. These findings are consistent with a model in which femicide news increase expectations about future intimate partner violence in case no action is taken. Our results imply that recurrent information campaigns and public discussion can foster help-seeking from survivors of gender-based violence.

The Italian region Emilia-Romagna ranks first among the world’s most important cooperative districts. Using a unique dataset covering all firms registered in the region, we investigate the performance of active firms in the period 2010–18. By focusing on added value, employment and profits of cooperative firms as compared to conventional firms, we disentangle the differences between the average performance of the two types of companies and detect the presence of a “size effect” driving much of the difference between them. Moreover, our results strengthen previous empirical evidence about the behavior of cooperative firms: they seem to optimize a mixture of employment and profits, assigning a greater weight to the former during downturns and stagnation. Hence, as a type of firm, they look more resilient than conventional companies, at least as far as employment is concerned. Finally, we examine the regional logistics industry and compare also the productivity per employee in the two segments of the sector.

We study the effects on corporate loan rates of an unexpected change in the Italian legislation which forbade interlocking directorates between banks. Exploiting multiple firm-bank relationships to fully account for all unobserved heterogeneity, we find that prohibiting interlocks decreased the interest rates of previously interlocked banks by 16 basis points relative to other banks. The effect is stronger for high quality firms and for loans extended by interlocked banks with a large joint market share. Interest rates on loans from previously interlocked banks become more dispersed. Finally, firms borrowing more from previously interlocked banks expand investment, employment and sales.

We revisit the discussion about the relationship between price’s cyclical features, implicit collusion and the demand level in an oligopoly supergame where a positive shock may hit demand and disrupt collusion. The novel feature of our model consists in characterising the post-shock noncooperative price and comparing it against the cartel price played in the last period of the collusive path, to single out the conditions for procyclicality to arise both in the short and in the long-run. This poses an issue in terms of an antitrust agency’s ability to draw well defined conclusions on the firms’ behaviour after the occurrence of the shock, with particular reference for the litigation phase after a cartel breakdown.

Measuring economic uncertainty is challenging, but it is important for policymakers to address it, especially in countries for which there are virtually no uncertainty indices. This article proposes an index of economic uncertainty for Poland, EURQPL, based on Internet searches for specific terms to capture the level of uncertainty perceived by Internet-using economic agents. Compared to Bontempi et al. (2021) who analysed the US and Italy, the change of country, the use of either Polish or English in the definition of queries and the creation of regional indices offer interesting insights. The national index peaks at times commonly considered uncertain, such as the financial crisis and the coronavirus pandemic. Compared to the EURQ for the US and Italy, our index has a significant peak due to the teachers’ strike, a shock not reported in the literature. Particularly relevant are the terms related to social security and fiscal policy; uncertainty shocks have persistent effects on unemployment. Besides confirming how successfully Internet searches can be exploited in economic research, we highlight how regional indices can be used to study the impact of uncertainty on local economies.

We rationalize several facts emerging from the recent empirical research on cooperatives owned by workers (workers��� firms, WF) as: the concern of WFs for employment; the interplay between membership and workplace safeguard within WFs; the different reaction to shocks between WFs and profit-making firms. We do so by means of a new model of WFs short-run behavior in mixed duopoly. We consider an industry in which a WF competes with a profit maximizing company and we innovate with respect to the conventional Illyrian objective function. We then reconcile the literature on labor-concerned maximands in competitive markets and the one dealing with WFs in oligopolistic markets under the Illyrian maximand.

A theory in which the timing of consumer expectation adjustments is endogenously state-dependent and stochastic is proposed. These expectation adjustments generate highly heterogenous consumption responses to income windfalls: many households do not respond, those who do over-react, the marginal propensity to consume depends on windfall size and is asymmetric. We document these features in the Bank of England survey of consumers and find that they simultaneously rule out most previous explanations for these effects, including consumption adjustment cost and liquidity constraints. At the aggregate level, consumption is less sensitive to expansionary policies during recessions and its excess smoothness varies significantly over the business cycle with consumers’ attention, a feature that we document in US data.

This paper studies the short-term impact of a volcano eruption on tourism demand, supply, and hospitality labour in La Palma (Spain), an island economy that is highly dependent on the tourism sector. Based on a monthly panel dataset at the touristic zone level, we use Seemingly-Unrelated Difference-in-Differences (SUR-DiD) to identify the distinct responses of these three outcomes during and post eruption. Potential spillover effects on nearby islands are also examined. We find that, in La Palma Island, the volcano produced significant but asymmetrical drops in international demand, number of hotels and hospitality workers both during and after the eruption.

In the wake of 25 United Nations Climate Change Conferences of the Parties (and counting), international cooperation on mitigating greenhouse gas emissions to avoid substantial and potentially irreversible climate change remains an important challenge. The limited impact of the Kyoto Protocol on curbing emissions, and the gap between the ambitions of its successor and the Paris Agreement's lack of sanctioning mechanisms for addressing noncompliance, demonstrates both the difficulties in negotiating ambitious environmental agreements and the reluctance of countries to comply with their agreed emission targets once they have joined the treaty. Therefore, a better understanding of the obstacles and opportunities that the interactions between domestic and international policy pose for the design of successful international climate cooperation is of utmost importance. To shed light on the roots of the stalemate (and suggest possible ways out), this article reviews and draws lessons from a growing theoretical, experimental, and empirical literature that accounts for the hierarchical interplay between domestic political pressure and international climate policy.

We empirically investigate the relevance of multi-homing in two-sided markets. First, we build a micro-founded structural econometric model that encompasses demand for differentiated products and allows for multi-homing on both sides of the market. We then use an original dataset on the Italian daily newspaper market that includes information on double-homing by readers to estimate readers' and advertisers' demand. The results show that an econometric model that does not allow for multihoming is likely to produce biased estimates of demand on both sides of the market. In particular, on the reader side, accounting for multi-homing helps to recognize complementarity between products; on the advertising side, it allows to measure to what extent advertising demand depends on the shares of exclusive and overlapping readers.

We study patient mobility in the Italian National Health System, using patient-episode level data on elective Percutaneous Transluminal Coronary Angioplasty procedures over the years 2008–2011. We examine how patients' choice of the hospital is affected by changes in waiting times and clinical quality within hospitals over time. We estimate mixed-logit specifications and show the importance of jointly controlling for time-invariant and time varying clinical quality to identify the effect of waiting times. Conversely, failure to capture variations in clinical quality over time does not affect the estimate of the discouraging effect of travel distance. We provide evidence that patients are responsive to changes in waiting times and clinical quality: average demand elasticity with respect to own waiting times and mortality is estimated to be – 0.17 and – 1.38, respectively. Patients’ personal characteristics significantly influence how they trade off distance and waiting times with quality of care. We find a higher Willigness-To-Wait and Willingness-to-Travel to seek higher quality care for patients in the younger age groups and who are more severely ill. The results convey important policy implications for highly regulated healthcare markets.

Our main objective is exploring the association between widespread prosperity and the presence of the cooperative movement at the regional level in Italy between 2010 and 2019. We summarize the widespread prosperity through an index originally proposed by Sen (1976) and we then perform a panel regression showing that there is a positive and significant association between such an index and the presence of the cooperative movement as captured by the relative size of cooperative employees. We also detect that the cooperative movement contributes to the regional prosperity more through its employment than in terms of the added value it generates. Moreover, the size of the cooperative presence significantly concurs to explain some large differentials among Italian regions.

Although the study of the association between interventions in primary care and health outcomes continues to produce mixed findings, programs designed to promote the greater compliance of General Practitioners and their diabetic patients with treatment guidelines have been increasingly introduced worldwide, in an attempt to achieve better quality diabetes care through the enhanced standardisation of patient supervision. In this study we use clinical data taken from the Diabetes Register of one Local Health Authority (LHAs) in Italy’s Emilia-Romagna Region for the period 2014-2015. Firstly, we test to see whether the monitoring activities prescribed for diabetics by regional diabetes guidelines, actually have a positive impact on patients’ health outcomes and increase appropriateness in health care utilization. Secondly, we investigate whether GPs’ participation in the local Diabetes Management Program (DMP) leads to improved patient compliance with regional guidelines. Our results show that such a program, which aims to increase GPs’ involvement and cooperation in following regional guidelines for best practices, achieves its goal of improved patient compliance with the prescribed actions. In turn, through the implementation of the DMP and the greater involvement of physicians, regional policies have succeeded in promoting better health outcomes and the improved appropriateness of health care utilization.

No matter its source, financial- or policy-related, uncertainty can feed onto itself, inflicting the real economic sector, altering expectations and behaviours, and leading to identification challenges in empirical applications. The strong intertwining between policy and financial realms prevailing in Europe, and in Euro Area in particular, might complicate the problem and create amplification mechanisms difficult to pin down. To reveal the complex transmission of country-specific uncertainty shocks in a multi-country setting, and to properly account for cross-country interdependencies, we employ a global VAR specification for which we adapt an identification approach based on magnitude restrictions. Once we separate policy uncertainty from financial uncertainty shocks, we find evidence of important cross-border uncertainty spill-overs. We also uncover a new amplification mechanism for domestic uncertainty shocks, whose true nature becomes more blurred once they cross the national boundaries and spill over to other countries. With respect to ECB policy reactions, we reveal stronger but less persistent responses to financial uncertainty shocks compared to policy uncertainty shocks. This points to ECB adopting a more (passive or) accommodative stance towards the former, but a more pro-active stance towards the latter shocks, possibly as an attempt to tame policy uncertainty spill-overs and prevent the fragmentation of the Euro Area financial markets., 52 pages

This paper studies whether civic capital (those persistent shared beliefs and values that help a group overcome the free rider problem in the pursuit of socially valuable activities) acts an effective restraint against opportunistic behavior in transactions by looking at the firm-level degree of service outsourcing in Italy. Our results show that firms tend to outsource more services in areas where civic capital is higher. We claim that the rise in the propensity to engage in transactions with outside service suppliers stems from the decrease in opportunism between the parties involved. We consider a dynamic specification which allows to disentangle state dependence of service out- sourcing from firm-level heterogeneity, and we use historical instruments to address the potential endogeneity of civic capital.

Tourist taxes represent one of the principal sources of revenue for a number of local authorities. Using a dataset of more than 300 thousands reviews on TripAdvisor, we analyze the effect of tourist taxes on online ratings posted by hotel costumers. Online ratings are strategic variables for the competitiveness of hotels and local destinations and so the assessment of the impact of tourist taxes on online reviews is important to design suitable strategies and policies both for firms and local municipalities. We show that the share of complaints about the tax increases with the tax rate, but the relationship gets weaker as the hotel quality increases, suggesting that low-quality costumers are more sensitive to tax increases. Tax mentioning reviews have on average a 20% lower rating and this difference becomes smaller and not significant for high quality hotels. We disentangle the different sources of complaining, finding that the lack of information and the cash payments weight more negatively on the average rating (respectively less 27% and 21%). Using a random-effects logit model we show that what matters for costumers is the percentage tax on the room price and not the absolute amount of the legal tax rates based on the hotel stars. This effect is present only for hotel stays with an average double room price under 100 Euros. Our results provide public authorities with useful suggestions to change the actual tax system by setting the tourist tax as an ad valorem tax on room price and assessing optimal tax rates accordingly to their incidence on the price of the stay.

We investigate the economic resilience of the Italian regions between 2008 and 2019. We then calculate some indices of resistance as well as recovery for both real GDP per capita and employment. We show that during (and after) recessions such indices follow different patterns and the Southern regions perform worse than the rest of the country. Then we try to detect if and how the composition of employment relates to regional resilience. We show that the size of the cooperative employment improves the overall resilience of regional employment, especially during recoveries. We also show and explain that this is not the case with cooperative added value as related to the resilience of regional GDP. Overall, the cooperative movement seems to positively contribute to the resilience of regional economies, supporting an inclusive growth especially through the employment channel.

Economic inequality may fuel frustration, possibly leading to anger and antisocial behavior. We experimentally study a situation where only the rich can reduce inequality while the poor can express their discontent by destroying the wealth of a rich counterpart with whom they had no previous interaction. We test whether the emergence of such forms of antisocial behavior depends only on the level of inequality, or also on the conditions under which inequality occurs. We compare an environment in which the rich can unilaterally reduce inequality with one where generosity makes them vulnerable to exploitation by the poor. We find that the rich are expected to be more generous in the former scenario than in the latter, but in fact this hope is systematically violated. We also observe that the poor engage in forms of antisocial behavior more often when reducing inequality would be safe for the rich. These results cannot be rationalized by inequality aversion alone, while they are in line with recent models that focus on anger as the result of the frustration of expectations.

Recent structural VAR studies of the monetary transmission mechanism have voiced concerns about the use of recursive identification schemes based on short-run exclusion restrictions. We trace out the effects on impulse propagation of informational constraints embodying classical Cholesky-timing restrictions in otherwise standard Dynamic New Keynesian (DNK) models. By reinforcing internal propagation mechanisms and enlarging a model's equilibrium state space, timing restrictions may produce a non-trivial moving average component of the equilibrium representation, making finite order VARs a poor approximation of true adjustment paths to monetary impulses, albeit correctly identified. They can even serve as an independent source of model-based nonfundamentalness, thereby hampering shock identification via VAR methods. This notwithstanding, restricted DNK models are shown to feature (i) invertible equilibrium representations for the observables and (ii) fast-converging VAR coefficient matrices under empirically tenable parameterizations. This alleviates concerns about identification and lag truncation bias: low-order Cholesky-VARs do well at uncovering the transmission of monetary impulses in a truly Cholesky world.

High-frequency (HF) surprises of relevant asset prices around central bank meetings are extensively employed in the literature to identify the effects of conventional/unconventional monetary policy. This identification strategy assumes that these surprises reflect either a single unconventional ‘monetary shock’ or, as recently suggested, jointly an unconventional monetary shock and a central bank ‘information shock’. In this paper we show that monetary policy in the euro area after 2008 is best characterized by three shocks, not two. Besides the unconventional monetary shock and the information shock, we consider a third shock resulting from the ECB directly managing fragmentation risk in the sovereign bond market. We call this additional shock ‘spread shock’, and show that it permits to solve a puzzle we observe in HF comovement of long term risk free rates and sovereign spreads around press conferences. We identify the dynamic causal effects produced by the three shocks through a proxy-SVAR methodology which, using HF surprises of the euro area risk-free yield curve, stock prices and sovereign spreads, combines sign-restrictions with narrative restrictions and then extracts external variables (instruments) from an admissible identification set. Empirical results, obtained through a daily proxy-SVAR and Local Projections based on monthly data, reveal that the spread shock represents an important ingredient of the transmission mechanism of the monetary policy after the Global Financial Crisis. It reflects ECB’s attempt to offset self-fulling expectations of default in the euro area sovereign debt markets and behaves as a complement, not a substitute of the information shock.

We provide novel estimates of gender differences in the allocation of time by Italian adults and document their trends over the span 2002-2014, pooling three time-use surveys run by the Italian National Institute of Statistics (ISTAT). The positive gap (females-males) in time devoted to Household work and the negative gap in Market work and Leisure are found to have narrowed over the observed period, mainly due to changes in women's time allocation, while the positive gap in time devoted to Child care remained substantially constant. In 2014, the sharing of family duties appears still heavily unbalanced even when we look at the subsample of full-time working parents. Full-time working mothers devote to Market work about 4 hours per week less than their partners, but they devote 14 hours per week more to Household work and 3 hours and a half more to Basic child care. This translates in 13 hours per week more total (paid and unpaid) work and 11 hours per week less Leisure. On the positive side, the gender gap in time devoted to Quality child care exhibits a reversed sign in 2014. The change is driven by weekend days, when partners of full-time working mothers become the main provider of this type of care.

This paper investigates the role of biased health perceptions as a potential driving force of risky health behaviors. We define absolute and relative health perception biases, illustrate their measurement in surveys and provide evidence on their relevance. Next, we decompose the theoretical effect into its extensive and intensive margin: When the extensive margin dominates, people (wrongly) believe they are healthy enough to "afford" unhealthy behavior. Finally, using three population surveys, we provide robust empirical evidence that respondents who overestimate their health are less likely to exercise and sleep enough, but more likely to eat unhealthily and drink alcohol daily.

This article deals with the role of time in causal models in the social sciences. The aim is to underline the importance of time-sensitive causal models, in contrast to time-free models. The relation between time and causality is important, though a complex one, as the debates in the philosophy of science show. In particular, an outstanding issue is whether one can derive causal ordering from time ordering. The article examines how time is taken into account in demography and in economics as examples of social sciences in which considerations about time may diverge. We then present structural causal modeling as a modeling strategy that, while not essentially based on temporal information, can incorporate it in a more or less explicit way. In particular, we argue that temporal information is useful to the extent that it is placed in a correct causal structure, thus further corroborating the causal mechanism or generative process explaining the phenomenon under consideration. Despite the fact that the causal ordering of variables is more relevant than the temporal order for explanatory purposes, in establishing causal ordering the researcher should nevertheless take into account the time-patterns of causes and effects, as these are often episodes rather than single events. For this reason in particular, it is time to put time at the core of our causal models.

The paper estimates the political connection premium for Italian cities tracked during the second half of the 1900s, when the role of the state in the economy was very widespread. It leverages the peculiar features of the gridlocked political landscape in place between the end of World War II and the fall of the Berlin wall, during which most influential politicians remained in charge for a very long time. We compare connected cities - small areas surrounding birthplaces of both prime ministers and leaders of the parties in power - with very similar, but unconnected municipalities, and find that politically connected cities gained a population premium of 8% over 40 years. When the connection ends, the difference in growth rate fades away. We document that birthplaces of powerful politicians benefited from both infrastructure investments and the location of plants by state-owned enterprises. Not surprisingly, the connection favored industrialization, raised employment and wages, but crowded out private entrepreneurship. Finally, our empirical evidence indicates that agglomeration economies in treated municipalities were not higher, thus suggesting that, if anything, place-based interventions linked to political connections have not been output-enhancing from a nationwide point of view.

The milk addiction paradox refers to an empirical finding in which commodities that are typically considered to be non addictive, such as milk, appear instead to be addictive. This result seems more likely when there is persistence in consumption and when using aggregate data, and it suggests that the AR(2) model typically used in the addiction literature is prone to produce spurious result in favor of rational addiction. Using both simulated and real data, we show that the milk addiction paradox disappears when estimating the data using an AR(1) linear specification that describes the saddle-path solution of the rational addiction model. The AR(1) specification is able to correctly discriminate between rational addiction and simple persistence in the data, to test for the main features of rational addiction, and to produce unbiased estimates of the short and long-run elasticity of demand. These results hold both with individual and aggregated data, and they suggest that, for testing rational addiction, the AR(1) model is a better empirical alternative than the canonical AR(2) model.

This paper employs the most recent Input Output tables to discuss the Italian lockdown after the COVID-19 epidemics. We define “basic activities” and derive a ranking of industries which more intensively contribute to them. Confronting our results with the choices of the Italian government, we find that these were broadly correct in terms of industrial composition. However, we find that the lockdown of industries such as construction, real estate and manufacture of basic metals reveal a very conservative preferences in terms of the target share of output of essential activities (below 85 %).

We consider a broad class of intertemporal economic problems and characterize the short-run and long-run responses of the demand for a good to a permanent increase in its market price. Depending on the interplay between self-productivity and time discounting, we show that dynamic substitution effects can generate price elasticities of opposite signs in the short run and in the long run. (JEL D11, D15, H20, J22, J24)

How large are government spending and tax multipliers? The fiscal proxy-SVAR literature provides heterogenous estimates, depending on which proxies - fiscal or non-fiscal - are used to identify fiscal shocks. We reconcile the existing estimates via a flexible vector autoregressive model that allows to achieve identification in presence of a number of structural shocks larger than that of the available instruments. Our two main findings are the following. First, the estimate of the tax multiplier is sensitive to the assumption of orthogonality between total factor productivity (non-fiscal proxy) and tax shocks. If this correlation is assumed to be zero, the tax multiplier is found to be around one. If such correlation is non-zero, as supported by our empirical evidence, we find a tax multiplier three times as large. Second, we find the spending multiplier to be robustly larger than one across different models that feature different sets of instruments. Our results are robust to the joint employment of different fiscal and non-fiscal instruments.

This paper studies the impact of political risk on exchange rates. We focus on the Brexit Referendum as it provides a natural experiment where both exchange rate expectations and a time-varying political risk factor can be measured directly. We build a simple portfolio model which predicts that an increase in the Leave probability triggers a depreciation of the British Pound, both on account of exchange rate expectations and of political risk. We estimate the model for multilateral and bilateral British Pound exchange rates. The results confirm the model’s main implications. When we extend the analysis to a portfolio model of multiple currencies, we find that the cross-currencies restrictions implied by the theory are not rejected by our system estimation. Moreover, the joint estimates of the multi-currency model in the presence of time-varying political risk premium are in many cases consistent with the Uncovered Interest Parity.

This paper proposes a comparison between multidimensional and unidimensional poverty indicators. Sets of poor units identified by traditional head count ratio, fuzzy unidimensional and fuzzy multidimensional indices are compared by means of a rank correlation analysis. The robustness of the comparison is ensured by a simulation study, which allows to address several issues related not only to fuzzy sets based methods, such as the subjective choice of membership to the poor set, but also to the multidimensional measurement, such as the effect of the weighting system. Our results stress that the unidimensional indicators provide partial information on poverty condition.

This paper examines different approaches for assessing causality as typically followed in econometrics and proposes a constructive perspective for improving statistical models elaborated in view of causal analysis. Without attempting to be exhaustive, this paper examines some of these approaches. Traditional structural modeling is first discussed. A distinction is then drawn between model-based and design-based approaches. Some more recent developments are examined next, namely history-friendly simulation and information-theory based approaches. Finally, in a constructive perspective, structural causal modeling (SCM) is presented, based on the concepts of mechanism and sub-mechanisms, and of recursive decomposition of the joint distribution of variables. This modeling strategy endeavors at representing the structure of the underlying data generating process. It operationalizes the concept of causation through the ordering and role-function of the variables in each of the intelligible sub-mechanisms.

The standardisation of trade secret protection was one of the goals of the TRIPs Agreement of 1998. Nevertheless, substantial differences in this protection remain across jurisdictions. When defining the optimal scope of trade secrets law, lawmakers should be aware that strong trade secret protection is likely to promote inventiveness, but it is also likely to hinder the diffusion of knowledge and prevent competition.

This paper uses replicator dynamics to compare the steady states arising from two types of common property regimes - one in which over-exploiters are punished by the resource users themselves, and another where enforcement is handled by guards who collect a tax from the users. The use of guards requires a less restrictive set of parametric conditions in order to maintain an equilibrium with no over-exploiters. However, it can also stabilize an outcome in which all users over-exploit and are punished, but not enough to induce more cooperation (less resource extraction). These results can be used in guiding and structuring the formation of new common property regimes.

We investigate the role played by the credit supply shock across the business cycle in the U.S. over the period 1973 - 2018. We estimate a nonlinear VAR including nominal, real, monetary, and financial variables. According to our results, a credit supply shock triggers asymmetric and negative effects on macroeconomic variables. We find that the state-dependent forecast error variance decomposition of industrial production, employment, and inflation due to the shock is from six to eight times larger in recessions than in normal times.

This paper develops a theoretical framework for four sustainability paradigms (weak sustainability, a-growth, de-growth, strong sustainability) within cooperative and non-cooperative scenarios, and includes changes in four values (a sense of responsibility to nature and future generations; aversion to inequality for current and future generations). The model assesses the feasibility of sustainability solutions for a shared environment as a function of specific value changes in each country by interpreting these value changes as support for environmental policies. The solutions are defined in terms of consumption, use of the environment, and welfare of representative individuals in each country; they are characterised by efficiency and equality at both intra- and inter-generational levels; and they are checked for internal consistency and consistency with alternative approaches such as utilitarianism, egalitarianism (i.e., Arneson, Dworkin, Sen), and contractarianism. Theoretical insights are obtained by comparing contextual stability and relative effectiveness of the environment's use among countries in alternative scenarios. A case study of the Baltic Sea operationally suggests that the currently adopted strong sustainability (i.e., an ecosystem approach) in a non-cooperative scenario (i.e., countries attempt to maximize their own rather than overall welfare) is internally consistent, relatively efficient, and consistent with Dworkin egalitarianism. A-growth was never feasible, but de-growth in which Denmark, Finland, Germany, and Sweden increase environmental protection would increase intra-generational equality; de-growth or weak sustainability in which Estonia, Latvia, Lithuania, Poland, and Russia increase environmental R&D would increase intra- and inter-generational equality; weak sustainability and de-growth consistent with Arneson and Dworkin egalitarianism would improve the environmental status.

This paper studies whether countries benefit from servicing their debts during times of widespread sovereign defaults. Colombia is typically regarded as the only large Latin American country that did not default in the 1980s. Using archival research and formal econometric estimates of Colombia's probability of default, we show that in the early 1980s Colombia's fundamentals were not significantly different from those of the Latin American countries that defaulted on their debts. We also document that the different path chosen by Colombia was due to the authorities' belief that maintaining a good reputation in the international capital market would have substantial long-term payoffs. We show that the case of Colombia is more complex than what it is commonly assumed. Although Colombia had to re-profile its debts, high-level political support from the US allowed Colombia do to so outside the standard framework of an IMF program. Our counterfactual analysis shows that in the short to medium run, Colombia benefited from avoiding an explicit default. Specifically, we find that GDP growth in the 1980s was higher than that of a counterfactual in which Colombia behaved like its neighboring countries. We also test whether Colombia's behavior in the 1980s led to long-term reputational benefits. Using an event study based on a large sudden stop, we find no evidence for such long-lasting reputational gains.

This paper studies the real effects of an exogenous UK tax change in recessions and expansions. The tax shock is identified via the measure proposed by Cloyne (2013). Combining local projection techniques (Jordà, 2005) with smooth transition regressions (Granger and Teräsvirta, 1994), tax policy shock is found to affect UK macroeconomic variables depending on the phase of the business cycle the economy is when tax shock occurs. An exogenous tax cut in recessions triggers a large, persistent, positive, and statistically significant reaction in output, consumption, investment, exports, imports, and government consumption. The results suggest that the output tax multiplier is positive and above one (in absolute value) in recessions but not in expansions. The size and the sign of responses of a number of macroeconomic variables are also found to be state-contingent.

The paper sketches a coherent history of the choice of the measure standard from Adam Smith’s Wealth of Nations to Sraffa’s Production of Commodities. As neither the Smithian labour commanded unit nor the Ricardian-Marxian labour embodied one provide a general solution to the dilemma concerning the finding of an invariable standard, the author shows the shortcomings of both methods in an analytically rigorous way. Several years later, the largely unacknowledged fourth chapter of the General Theory once again tackles the matter of measuring aggregate values adopting a net approach and introducing an ad hoc unit. Concerned by the inherent difficulties of the operation, Keynes starts from an harsh criticism towards Pigou’s notion of national dividend to end up asking himself a number of questions that makes him partially lean towards the later Sraffian approach as presented in Production of Commodities, though his stance is not fully compliant either with the premises or the aims of Piero Sraffa’s theoretical framework. In the final part, a general solution based on net labour productivity is considered.

Macroeconomic uncertainty consists of three components: the unobservable, the heterogeneous and the “uncertain”. We are unaware of exactly when economic agents perceive uncertainty and which type of uncertainty interests them. This paper introduces and outlines a way of conducting large-scale data searches on the Web. We create the EURQ index of “economic uncertainty related queries” for both the USA and Italy. We show that the EURQ encapsulates agents’ need to gather more information during periods of uncertainty. This need either spontaneously arises in the case of macro-real and political uncertainty, or is induced by the media in the case of normative and financial uncertainty. This distinction is extremely important when trying to understand the immediate impact of fiscal policy uncertainty on economic variables, and how financial shocks can produce a significant short-term impact on economic activity. It is also helpful when trying to solve the identification and endogeneity issues encountered in the literature when assessing the role of uncertainty.

Extending a brand beyond its original product category is a major strategy for long-term profitability. A brand owner can internalize the development of the extension product, or license the brand to an external partner in order to exploit the licensee’s better capabilities and higher efficiency on the targeted market. Brand extension is characterized by the presence of the socalled reciprocal effect, whereby the effort exerted to develop and market the extension has a feedback effect – either positive or negative – on the value of the parent brand. Under licensing, this effect is an externality from the standpoint of the brand owner. The licensing relationship is characterized by double-sided moral hazard, requiring an incentivizing contract; the reciprocal effect adds a further element that should be governed by the contract. Indeed, a positive effect can boost the attractiveness of licensing relative to internal development, whereas a negative one can have the opposite effect. Drawing from extant literature, we build a game-theoretical model and show how reciprocal effect, (dis)similarity between the extension product and the parent brand, and (in)efficiency of the brand owner relative to the licensee in developing the extension shape the optimal licensing contract and affect the choice between internal development and licensing.

The paper is about the political consequences of increasing economic inequality in Western economies. Political theorists have often stressed that democracy is in troubles when its population is not broadly uniform in income and wealth because unequal economic resources can easily translate into a surplus of political resources in the hands of the few. The connections between economic inequality and democracy, however, are not easy to detect and the body of literature is not so large to provide robust assessments of their complex relationship. The aim of this paper is to review the links between the two and to offer some hints on the political relevance of the inequality consequences, if any, on democracy.

We study the problem facing the operator of a lottery who is charged with raising revenue for the public finances. Demand for the lottery is a function of both disposable income and the pricing of the game. Departing from the current literature, we show that optimal lottery pricing includes corrections for the degree of inequality and skewness in the income distribution and features of the function relating lottery spend to disposable income. When gross lottery expenditure is regressive, it is optimal for the operator to improve the terms of the game by being more generous with the proportion of spend that is returned to players. The opposite result holds when gross lottery expenditure is progressive. Using results from analysis of the U.K. National Lottery’s Saturday game between 1997 and 2013, we show that the effective price was about ten percentage points too low to be efficient, so that the operator was not fully exploiting its lottery power. However, we also show that, were it to have raised its price to improve efficiency, it would have increased inequality.