We investigate the effect of electoral rules and political regimes on fiscal policy outcomes in a sample of democracies, exploiting both cross country and time series variation in the data. Presidential regimes lead to smaller governments, while majoritarian elections lead to smaller governments and smaller welfare programs. Different constitutions are also associated with different spending patterns over time and different cyclical response to income shocks. Some of these empirical regularities are in line with recent theoretical work; others still await a theoretical explanation.

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Political Institutions and Policy Outcomes: What are the Stylized Facts? ∗

This paper investigates the markup of price over marginal cost in Italian manufacturing branches. The approach used is an extension of Hall's model that addresses some measurement shortcomings and theoretical limitations that may affect this class of model. The hypothesis of perfect competition is rejected in the majority of sectors over the period 1977–1995. The cyclical behavior of markups is found to vary significantly across branches, thereby helping to explain the contradictory evidence regarding the whole manufacturing sector reported in the literature. At branch level, industry concentration is found to be associated with countercyclical markups, providing scope for real effects of aggregate demand shocks. Finally, the size of the markup is negatively affected by both domestic and foreign competitive pressure.

Markups and the Business Cycle: Evidence from Italian Manufacturing Branches

Asymmetric bank lending channels and ECB monetary policy

. This paper analyzes the functioning of monetary policy transmission mechanisms in Italy from 1984 to 1998, highlighting the role performed by the credit system. We extend the Bernanke and Blinder model (1988) to the case of an open economy under a quasi-fixed exchange rate regime, deriving analytically the conditions for the functioning of the three monetary policy channels generally identified in the literature (‘money’, ‘exchange rate’ and ‘credit’). These conditions explain the partial effectiveness of monetary policy in achieving price and income targets, while maintaining external equilibrium. By means of a structural VECM analysis, we evaluate the effectiveness of the transmission of monetary policy through the three channels.

The Bernanke and Blinder Model in an Open Economy: The Italyn Case

This paper identifies the macroeconomic factors that influence Italian equity returns and tests the stability of their relation with securities returns. The relation between stock returns and the macroeconomic factors is found to be unstable: Not only are the factor loadings of individual securities virtually uncorrelated over time, but a high percentage of the shares experience a reversal of the sign of the estimated loadings. This result is not confined to single periods or to a small group of shares, but holds in different sub-periods and for securities in all risk classes. These findings suggest that research should carefully investigate the specification of the return generating process and the stability of the risk measures.

https://papers.ssrn.com/sol3/Delivery.cfm/Ecno093.pdf?abstractid=368791&mirid=1&type=2

The Stability of the Relation Between the Stock Market and Macroeconomic Forces

Fiscal consolidation by intergovernmental transfers cuts? The unpleasant effect on expenditure arrears

This paper analyzes the decline in Italian municipal investments that began in the middle of the last decade. The analysis shows that, organizational methods for service provision and budgetary financial conditions being equal, investments declined more sharply in the larger municipalities subject to the Domestic Stability Pact than in those which were exempted. The Pact effects have been relatively stronger for those municipalities in better financial conditions, that would have been able to finance investments with their own resources. The Pact has helped to achieve the main goal of the legislator, i.e. to keep the deficit under control. It has also provided a stimulus for local governments to be more rigorous in drafting their budgets, leading to a closer correlation between the amounts committed and those actually spent, in line with the provisions of the new accounting system which has come into force in 2015.

Il calo degli investimenti nei Comuni tra Patto di stabilità interno e carenza di risorse

Local governments may increase expenditure arrears to relax the financial constraints induced by intergovernmental transfer cuts. We assess this hypothesis using information from accounting and financial reports from Italian municipalities for the period 2003-2010. By exploiting the long-lasting effect of the 1977-1978 structural reform of Italian local public finance, we employ an instrumental variable approach to address endogeneity concerns. We find robust empirical evidence that the lower the intergovernmental grants, the larger the use of arrears in public investment expenditures by municipalities. We argue that, when local governments are not subject to effective controls on the formation of arrears but fiscal rules impose binding budget constraints, a cut in intergovernmental transfers can partially diminish the effectiveness of fiscal consolidation at local level.

Intergovernmental transfers and expenditure arrears

This paper analyses the functioning of monetary policy transmission mechanisms in Italy from 1984 to 1998, highlighting the role performed by the credit system. We extend the Bernanke and Blinder model (1988) to the case of an open economy under a quasi-fixed exchange rate regime, deriving analytically the conditions for the functioning of the three monetary policy channels generally identified in the literature ("money", "exchange rate" and "credit"). These conditions explain the partial effectiveness of monetary policy in reaching price and income targets, while maintaining external equilibrium. By means of a structural VAR analysis, we evaluate the effectiveness of the transmission of monetary policy through the three channels.

La "credit view" in economia aperta: unï¿½applicazione al caso italiano

This paper analyses the business cycle properties of 150 time series, including real and monetary variables, relevant to the regional economy. Following the methodology adopted by Altissimo, Marchetti and Oneto (2000), we propose new monthly coincident and leading composite indicators for the regional business cycle; the leading indicator anticipates the turning points of the coincident indicator on average by five months. With respect to the Italian indicator, recently proposed by ISAE and Bank of Italy, the regional indicator turns out to be particularly sensitive to the evolution of external conditions, revealing cyclical fluctuations not exhibited by the national one. The chronology confirms the peculiarity of the local economy, characterised by a very long expansion lasting from March 1993 to November 1996, tied to the depreciation of the exchange rate as a consequence of the exit from the EMS, and by two idiosyncratic fluctuations. The first one is a short and pronounced cycle occurred during the period 1990-91, coinciding with the Gulf war and the subsequent short recovery driven by the German fiscal expansion tied to the re-unification process. The second is characterised by the relevant recession occurred between February 1998 and April 1999, following the Asian currency and financial crisis.

Paolo Chiades

Papers

Fiscal consolidation by intergovernmental transfers cuts? The unpleasant effect on expenditure arrears

Il calo degli investimenti nei Comuni tra Patto di stabilità interno e carenza di risorse

Intergovernmental transfers and expenditure arrears

La "credit view" in economia aperta: unï¿½applicazione al caso italiano

Lï¿½utilizzo degli indicatori compositi nell'analisi congiunturale territoriale: un'applicazione all'economia del Veneto