Luciano Greco

POLICY RULES, REGIME SWITCHES, AND TREND INFLATION: AN EMPIRICAL INVESTIGATION FOR THE UNITED STATES

This paper estimates Taylor rules featuring instabilities in policy parameters and switches in policy shocks’ volatility for the post-World War II (WWII) U.S. economy. We contrast a rule embedding a fixed-inflation target with another featuring trend inflation, i.e., a time-varying inflation target. The rule embedding trend inflation turns out to be (a) empirically superior according to a marginal likelihood-based comparison and (b) more able to pin down some relevant episodes of the post-WWII U.S. monetary policy history. Estimates conducted with Greenbook data confirm the empirical superiority of the rule featuring a time-varying inflation target. A comparison with recently published estimates of trend inflation is also conducted.

Understanding Value Creation in Public-Private Partnerships: A Comparative Case Study

Public-Private Partnerships (PPPs) are an important form of hybrid organization that may, if properly designed and managed, generate innovative solutions to complex problems by combining different institutional logics. Using data from a comparative case study of the creation of two PPPs in the Italian healthcare sector, we draw on ideas from business model design and organizational hybridity to explore how complexity can be managed inside PPPs and how this drives the creation of value for stakeholders. We link the literature on hybrid organizations with the one on business models by looking at the organizational mechanisms and processes that are implemented in PPP project governance, assets and processes. We go on to develop a theoretical model showing how effective business model design can help to bridge different logics and create value for stakeholders in the creation and operation of PPPs. This article is protected by copyright. All rights reserved.

The Optimal Design of Funded Pension Plans: Unbundling Financing and Investment

The design of fully funded pension plans is affected by governance and incentive problems, as underlined by the experience of several countries. The analytic perspective of contract theory allows to detect the nature of such problems: pension-fund managers have strong incentives to manipulate market expectations about their capacity through wasteful activities (e.g. marketing). The design of funded pension plans has, thus, to trade-off efficiency losses and gains linked to high-powered incentives associated to the competition among fund managers. By means of a simple theoretical setting, this trade-off is shown to be driven by the integration of financing (contribution collection) and investment (asset allocation and management) activities. A separation of financing and investment allows to centralize the former and allocate collected money to a sector of competitive fund managers, via an auction mechanism. Under contract incompleteness, the quasi-competitive setting of funded pillar is proven to be Pareto-superior to the market of competitive pension funds (integrating financing and investment).

Supporto pubblico al capitale di rischio: lezioni dalla crisi

L’articolo si prefigge di analizzare l’evoluzione, a cavallo degli ultimi anni di crisi, dell’intervento pubblico a supporto del capitale di rischio tramite strumenti innovativi di partnership con operatori privati. L’intervento pubblico origina da fallimenti del mercato del capitale di rischio, particolarmente nel segmento del venture capital, accentuati dalla crisi e segnatamente a scapito delle giovani piccole e medie imprese innovative, potenziale motore di sviluppo e crescita economica. Dopo un iniziale quadro di analisi degli strumenti in oggetto, l’articolo delinea il contesto internazionale per focalizzarsi sulla situazione italiana e regionale veneta. Dall’analisi delle esperienze considerate emerge innanzitutto come l’attenzione al contesto normativo e culturale sia un necessario complemento degli interventi pubblici di investimento diretto nel capitale di rischio. Inoltre, l’intervento pubblico nel medio-lungo termine deve risultare funzionale allo sviluppo del mercato privato, ed evitare di allocare eccessivi oneri a carico delle finanze pubbliche.

Intergovernmental transfers and expenditure arrears

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.

Bottleneck Access with Structural Regulation and Endogenous Competition

In a simple model of network industry, where an upstream monopolist provides an essential input for downstream service supply, we analyze the competitive settings arising in the downstream market under alternative regulatory frameworks; we combine structural (i.e. vertical integration, functional/ownership separation) and conduct (discriminatory and nondiscriminatory access) regulatory remedies. Downstream firms are characterized by different levels of cost efficiency in the provision of the service. We show that the degree of heterogeneity in firmsO cost efficiency is critical to the determination of the amount of competition that emerges in the downstream market, and of the efficiency of the industry. We show that i) when downstream firms are significantly heterogenous, discriminatory access fees may be socially desirable and ii) vertical integration is always socially preferable.

Market-Creating Tax Competition

Tax competition may create new markets, by imposing fiscal restraints, and affect the relative performance of public programs in which the public and private provision coexist (universal or topping up) or are alternative (selective or opting out). Tax competition dwindles the scope of universal programs, while selective programs are relatively immune to it. However, the existence of a minimum operative scale, and the possible mismatch between opting-in and optimal target population may provoke the inefficiency of the latter. A social welfare ranking of universal and selective programs relies on the economic structure, and on governments preference for redistribution.

Una nota quantitativa sulle prospettive della finanza provinciale

Una nota quantitativa sulle prospettive della finanza provinciale (di Luciano Greco) - ABSTRACT: The Note analyses through simulations on official statistical data the main effects of the Italian public budget law (i.e. legge finanziaria) for 2003 on the system of Italian provinces. These simulations are contrasted with alternative reform options, that could fit in the transition scenario that presently features the institutional and financial setting of local governments in Italy.