Andrea Vaona

INFLATION AND GROWTH IN THE LONG RUN: A NEW KEYNESIAN THEORY AND FURTHER SEMIPARAMETRIC EVIDENCE

This paper explores the influence of inflation on economic growth both theoretically and empirically. We propose to merge an endogenous growth model of learning by doing with a New Keynesian one with sticky wages. We show that the intertemporal elasticity of substitution of working time is a key parameter for the shape of the inflation–growth nexus. When it is set equal to zero, the inflation–growth nexus is weak and hump-shaped. When it is greater than zero, inflation has a sizable and negative effect on growth. Endogenizing the length of wage contracts does not lead to inflation superneutrality in the presence of a fixed cost of wage resetting. Adopting various semiparametric and instrumental-variable estimation approaches on a cross-country/time-series data set, we show that increasing inflation reduces real economic growth, consistent with our theoretical model with a positive intertemporal elasticity of substitution of working time.

Innovation and Productivity in European Industries

The labour productivity impact of innovation is investigated in this paper combining neo-Schumpeterian insights on the variety of innovation with the importance of industrial structures and firm size; two models are proposed for explaining productivity and export success in European manufacturing industries and firm-size classes. The empirical estimates are based on data from the European innovation survey (CIS 2), covering Austria, France, Italy, the Netherlands, and the UK, broken down by 22 sectors and for large, medium, and small firms. The econometric results, obtained adopting cross-sectional estimation methodologies able to account for unobserved industrial characteristics, show that productivity in Europe relies on product and process innovation, with the support of the efficiency gains provided by grouped business structures. Conversely, in Italy the introduction of new machinery linked to innovation appears as the key mechanism supporting domestic productivity. When export success is considered, all countries have to rely on an innovation-based model of competitiveness.

An empirical investigation into the gravitation and convergence of industry return rates in OECD countries

Tests are offered for the hypotheses that sectoral average profit rates and incremental return rates are gravitating around or converging towards a common value. We study data for various OECD countries relying on an econometric method able to account for residual autocorrelation and cross‐sector correlation. Our null hypotheses receive only a mixed empirical support. This is interpreted as the result of various kinds of limitations to capital mobility. Policy implications are discussed.

Further econometric evidence on the gravitation and convergence of industrial rates of return on regulating capital

The hypotheses of sectoral return rates on regulating capital either gravitating around or converging toward a common value is tested on data for various OECD countries by adopting two panel varying coefficient approaches. The null hypotheses receive some empirical support, which turns out to be stronger once focusing on manufacturing industries only. The paper offers a meta-analytic framework to assess the results obtained in the present contribution as well as in the past literature. Finally, implications for economic policies and future theoretical and empirical research are discussed.

Merging the Purchasing Power: Parity and the Phillips Curve Literatures: Regional Evidence from Italy

The main purpose of this article is to merge together two strands of the literature regarding, either directly or indirectly, inflation—specifically, the purchasing power parity and the Phillips curve ones. To accomplish this task, this contribution applies the tools of Dynamic Panel Data estimation on a sample of eighty one Italian provinces from the year 1986 to the year 1998, exploiting cross-sectional variation to avoid using instruments not directly connected with the inflation-generating process. This research strategy allows us to conclude that inflation is characterized by a low degree of persistence and by conditional β-convergence across provinces. Its most suitable driving variable is the unemployment rate, and there are long-term nonneutralities at the regional level.

The Duration of Union Membership in Italy: A Research Note

Thanks to direct access to union databases, this note can answer two new questions in industrial relations: how long union membership lasts and what are the determinants of its duration within an open-shop context. This also allows for conceptualizing union membership as a much more dynamic phenomenon than in previous studies, where it was considered a static condition whose causes or effects were to be investigated. Regression analysis applied to a sample of 29,035 Italian workers highlights that union membership duration is a positive but declining function of age. Furthermore, women, flexible workers, foreign ones, and those working in cities tend to show less attachment to union membership than the other workers.

Determinants of technology transfer through the CDM: a within-country analysis for China

Technology transfer (TT) is not mandatory for Clean Development Mechanism (CDM) projects, yet proponents of CDM argue that TT in CDM can bring new technologies to developing countries and thus not only reduce emissions but also foster development. We review the quantitative literature on determinants of TT in CDM and estimate determinants for CDM projects in China. China is by far the largest host country of CDM projects and it is therefore crucial to understand the factors that drive TT there. To gain better interpretation, we focus on heterogeneity within a single country and results can thus be linked to specific policies of the country. Our probit estimations confirm previous international cross-country studies, indicating that larger projects and more advanced technologies are more likely to involve TT. In addition, we find evidence that agglomeration effects are more pronounced at the province level rather than larger regions. We also find a positive effect of foreign direct investment (FDI) on TT, and academic research and development (R&D) is complementary to TT. Policy relevance Technology transfer (TT) is a goal of Chinese CDM legislation, but it is not a prerequisite for project approval. Our estimations show the project specific, technological and region-specific features that encourage more TT among CDM projects. Some variables analysed such as R&D spending and FDI (both are found to have positive effects on TT) can be, to some extent, influenced by the policy-makers. Moreover, we find some evidence for the presence of negative agglomeration effects on the provincial level: the likelihood of TT is decreasing in the number of previous projects operating in the same technology and province. This finding needs to be interpreted with great caution. It may suggest the existence of a learning externality, which could serve as a justification for policy intervention. Any policy intervention requires however careful analysis of potential positive or negative externalities resulting from the agglomeration of CDM projects and a comparison of possible benefits with the costs of TT.

Regulating Rates of Return Do Gravitate in US Manufacturing

In this paper we test for the gravitation of regulating return rates, namely those return rates yielded by capital goods incorporating the best methods of production. We define them within a vintage capital model taking into consideration capacity utilization, capital depreciation and wages of workers using past capital vintages. We consider two data sets regarding US manufacturing activities and we find that gravitation does take place. Our results are contrasted with those of the previous literature. Research and policy implications are discussed.

Spatial autocorrelation and the sensitivity of RESET: a simulation study

Ramsey’s regression specification error test (RESET) is thought to be robust to spatial correlation. Building on the literature on spurious spatial regression, we show that this is not so in presence of spatial correlation in both the error and the independent variable of an econometric model. Correcting the test for spatial correlation improves its performance, though in large samples this strategy is not completely successful. Once assuming that spatial autocorrelation in both the independent variable and in the error is produced by a spatial moving average model instead of a spatial autoregressive one, RESET displays more robustness.

A survival analysis approach to the duration of union membership in Italy

Thanks to direct access to union databases, this article applies survival analysis to a sample of 47 637 Italian workers trying to explain the determinants of the duration of union membership. The results show that union membership duration is a positive, though declining, function of age. Furthermore, women, flexible workers, foreign ones and those working in cities tend to show less attachment to union membership than other workers. The estimated median duration is about 6 years. Positive hazard duration dependence is also found. Unobserved heterogeneity is detected but it does not significantly affect model estimates.