Perspective developments of public finance in Italy: a primer

The paper outlines the main current issues concerning Public Finance in Italy. It is divided in three parts. The first part discusses the overall budget policy. Italy is in need to support the recovery from economic crisis, however budget action is limited by European constraints. Different way to go out are discussed. The second part analyzes specific public policies caarried on by the present Government. The third part criticizes the choice which has been done toward fiscal federalism.Public finance, Budget policies, Tax and expenditure policies, Fiscal Federalism, Italy

Is the Leverage of European Commercial Banks Pro-Cyclical?

Detecting whether banks?leverage is indeed procyclical is relevant to support the view that booms and crises may be reinforced by some sort of supply side ?nancial accelerator, whilst ?nding a plausible ex- planation of banks?behaviour is crucial to trace the road for a sensible reform of ?nancial regulation and managers? incentives. The paper shows that procyclical leverage appears to be well entrenched in the behaviour of a sample of major European banks, which are commonly labelled as mainly "commercial banks".Banks, Pro-cyclicality, Financial Regulation.

Efficient social policies with higher expenditure: an analysis for European countries

Based on the construction of two indicators to assess the relative effectiveness and efficiency of European welfare policies, we show that the variability of efficiency cannot be explained only by the amount of resources devoted to social policies but also by the institutional environment. The OLS regression shows that institutional variables- such as accountability and honesty of public officials- have high significant effects on the efficiency

The intraday interest rate under a liquidity crisis: the case of August 2007

By analyzing high frequency data for the European interbank market, we show that the intraday interest rate (implicitly defined by the term structure of the ON rate) jumped by more than ten times at the outset of the financial turmoil in August 2007, resulting in an inefficiency of the money market. This took place despite the provision of unlimited free daylight overdrafts by the ECB, on a collateralized basis. We suggest that such result may be attributed to an increase of the liquidity premium and of the cost of collateral.intraday interest rate, liquidity crisis, money market, central banking

The importance of electoral rule: Evidence from Italy

We employ bootstrap methods (Efron (1979)) to test the eect of an important electoral reform implemented in Italy from 1993 to 2001, that moved the system for electing the Par- liament from purely proportional to plurality rule (for 75% of the seats). We do not nd any eect on either the number of parties or the stability of governments (the two main objectives of the reform) that remained unchanged at their pre-reform level.Electoral system; Plurality rule; Duverger's law; Bootstrap.

A note on the power of panel conitegration tests - An application to health care expenditure and GDP

This paper enlarges on Gutierrez's (2003) results on the power of panel cointegration tests. By a comparison of power of panel cointegration tests, we show how the choice of most powerful test depends on the values of the sample statistics. Country - by - country and panel stationarity and cointegration tests are performed on a panel of 20 OECD countries over the period 1971 - 2004. Residual - based tests and a cointegration rank test in the system of health care expenditure and GDP are used to test cointegration. Asymptotic normal distribution of these tests allows a straightforward comparison: for some values of the sample statistics, residual - based and rank tests are not directly comparable as the power of the residual - based tests oscillates; for other values of the sample statistics, the rank test is more powerful than the residual - based tests. This suggests that a clear-cut conclusion on the most powerful test cannot be reached a priori

Another unconsidered sinister effect of indusrty-specific crises? On the possible emergence of adverse selection phenomena on the survival of entrepreneurial ventures.

This article explores the possibility that under an intensely negative industry-specific shock, the commonly detected positive relationship between the human capital of founders and the survival prospects of start-up businesses may actually be reversed. Starting from an analysis of the issue from a theoretical perspective in order to derive the necessary and sufficient conditions for the emergence of these adverse selection phenomena in entrepreneurship, the study examines a sample of 179 Italian start-ups operating in the ICT services market created during the boom period from 1995 to early 2000. Econometric analyses provide evidence that, during an intense industry crisis (i.e., early 2000 to 2003), entrepreneurs with a substantial amount of human capital may pursue an exit strategy.High-tech entrepreneurship; Adverse selection; Industry crises.

The Social Value of Public Information with Costly Information Acquisition

In a beauty contest framework, we show that more precise public information contributes to higher welfare when the precision of private information is endogenous. We consider a Stackelberg game in which public authorities decide the accuracy of public information taking into account how this affects the acquisition of private information and the choice of individual actions in equilibrium. Because the acquisition of private information is costly, an increase in the precision of public information increases welfare by reducing the incentives for acquisition of private information, thereby inducing socially valuable savings of private resources.Public information, private information, coordination, welfare

Social and alternative banking: project selection and monitoring after the New Basel Capital Accord

Any economic activity calls for the exercise of moral judgement. There are some economic activities that actively promote collective benefit as a primary or secondary aim, and there are others that aim to increase the value of a firm. Investment decisions always have collective impact, but collective returns may be ignored or considered less important in company management if the objective is the maximisation of shareholder wealth. The allocative function exercised by banks in their credit activity may take this into account. Some banks nowadays focus on social profile, while others integrate the traditional approach with this new sensibility. But unfortunately banking regulations governing stability and soundness of the financial system make no mention of the social profile. The New Basel Capital Accord was an opportunity to recognise that bank's objectives may not consist only of the maximisation of shareholder wealth. But it was a missed opportunity, in that it gave advantages to traditional commercial banks and not to banks focussing on collective goals. This paper puts forward proposals for integrating the Basel II framework with profiles of collective bank credit policy. Social credit evaluation methods could help to identify those ethical banks which are more successful in meeting collective objectives. A sustainable credit appraisal methodology could have been examined by the Basel Committee and could have incentivated sustainable banking by giving it specific advantages.social banking, alternative banking, socially responsible investing, investments appraisal, Basel II, new capital accord