Political institutions and central bank independence revisited

We build on earlier studies regarding Central Bank independence (CBI) by relating it to political, institutional and economic variables. The data suggest that CBI is positively related to the presence of federalism, the features of the electoral system and parties, the correlation between the shocks to the level of economic activity in the countries included in the sample and, for a sub-sample of economies, the convergence criteria to join the European Monetary Union (EMU).ICentral Bank independence; institutional systems; variable selection

The Federal Funds Rate and the Conduction of the International Orchestra

In the first ten years of EMU, monetary policy choices of the European Central Bank (ECB) in setting the short-term interest rate have followed, systematically, monetary policy decisions made by the Federal Reserve System (Fed). For, despite the presence of variable lags with respect to Fed decisions, turning points of European short-term interest rates have been largely anticipated by movements in the federal funds rate. In this paper we show that, in the context of a bivariate cointegrated system, a clear long-run US dominance emerges. Moreover, the structural analysis reveals that a permanent increase in the federal funds rate causes a permanent one-for-one movement in the eonia rate.Monetary policy; Identification; Structural Cointegrated VARs

The Italian Labour Market and the Crisis

The aim of this paper is to analyse the effects of the crisis on the Italian labour market. The Italian labour market is characterized by deep gender differences and regional variability. The data show that the crisis lead to an increase in the gap of female employment rates and women?s inactivity rates with respect to Europe. The North of Italy experienced a higher increase in unemployment than the South, where many people withdrew from the labour market because of poor employment prospects. Moreover, in Italy, the increase in unemployment has been mitigated by the increase in the number of workers having access to the wage supplementation fund who are not computed within the unemployed. However, the heterogeneity in the system of unemployment benefits increased inequalities amongst the unemployed. Using a micro simulation techniques, we estimate the effect of the crisis on income distribution and poverty and find that at the national level, the population showed a reduction in equivalised household income by about 1 percent. The limited impact on household?s equivalent income can be connected to the relatively high share of unemployed who are young with relatively low income and sustained by other members of the householdlabour market, poverty, economic crisis

Are defined contribution pension schemes socially sustainable? A conceptual map from a macroprudential perspective

If the combined retirement income, provided by public and private defined contribution (DC) pension schemes, falls below socially acceptable standards, there is a political risk that consensus seeker policymakers could yield to pressures to commit future fiscal revenues. These contingent liabilities, when incorporated in markets’ expectations, are bound to create spillovers on sovereign risk, with negative feedback loops on the capital adequacy of banks and of other intermediaries, owing to losses on their government paper. Among the causes of reduced annuities out of the final assets in DC pension funds is an equity risk premium much lower than the commonly values advertised by the industry and by policymakers. From a macroprudential perspective, this political risk should be taken into account in stress tests assessing banks’ resilience to financial shocks.pensions, equity risk premium, political risk, sovereign risk, stress test;

The Fragile Definition of State Fragility

We investigates the link between fragility and economic development in sub-Saharan Africa over a yearly panel including 28 countries for the 1999-2004 period. Beside the conventional definition of fragility adopted by the OECD Development Assistance Committee, we introduce the more severe definition of extreme fragility. We show that only the latter exerts a significantly negative impact on economic development, once standard economic, demographic, and institutional regressors are accounted for. As a by-product of this investigation we produce up-to-date evidence on the growth performance of the area. We find a tendency to convergence and no influence of geographic and historical factors.State fragility; growth; Africa; aid.

Job Separations, Job loss and Informality in the Russian Labor Market

Having unique data we investigate the link between job separations (displacement and quits) and informal employment, which we define in several ways posing the general question whether the burden of informality falls disproportionately on job separators in the Russian labor market. After we have established positive causal effects of displacement and quits on informal employment we analyze whether displaced workers experience more involuntary informal employment than their non-displaced counterparts. Our main results confirm our contention that displacement entraps some of the workers in involuntary informal employment. Those who quit, in turn, experience voluntary informality for the most part, but there seems a minority of quitting workers who end up in involuntary informal jobs. This scenario does not fall on all the workers who separate but predominantly on workers with low human capital. We also pursue the issue of informality persistence and find that informal employment is indeed persistent as some workers churn from one informal job to the next. Our study contributes to the debate in the informality literature regarding segmented versus integrated labor markets. It also contributes to the literature on displacement by establishing informal employment as an important cost of displacement. We also look at the share of undeclared wages in formal jobs and find that these shares are larger for separators than for incumbents, with displaced workers bearing the brunt of this manifestation of informality

An Optimization Approach for pricing of Discrete European Call options Based on the Preference of Investors

Firstly, a method for measuring the risk aversion of investors was proposed based on the prospect theory. Secondly, under a sole hypothetical condition in which the risk aversion degree for different assets is the same in a market, the pricing of discrete European options was given based on the objective probability. Thirdly, it was proven that the European option price obtained was a non-arbitrate price. And then, both for the binomial tree, which is a complete market, and for the trinomial tree, which is an incomplete market, pricing European options were discussed by implementing the method provided in this paper. Lastly, an illustration is used to demonstrate how to estimate preference parameters from market data and how to calculate options prices. The result states that the method in this paper is the same as the traditional risk-neutral methods in a complete market, but it is different from the traditional risk-neutral methods in an incomplete market, and more, the price obtained in this paper is affected by the objective probability and also contains the risk attitude of the investors

The Attractiveness of Countries for FDI. A Fuzzy Approach

This paper presents a new method for measuring the attractiveness of countries for FDI. A ranking is built using a fuzzy expert system whereby the function producing the final evaluation is not necessarily linear and the weights of the variables, usually defined numerically, are replaced by linguistic rules. More precisely, weights derive from expert opinions and from econometric tests on the determinants of countries’ FDI. As a second step, the view-point of investors from two different investing economies, the UK and Italy, are taken into account. Country-specific factors, such as the geographic, cultural and institutional distances existing between the investing and the partner economies are included in the analysis. This shows how the base ranking changes with the investor’s perspectiveforeign direct investments; fuzzy expert systems; attractiveness;

Allocation of Time within Italian Couples: Exploring the Role of Institutional Factors and their Effects on Household?s Wellbeing

taly is characterized by a very uneven distribution of paid and unpaid work in gender terms. Italy has the lowest female employment rate apart from Malta in the European region, with a tangibly wide gender gap in employment and participation rates to the disadvantage of women. Furthermore, the female labour supply is very unevenly distributed across the Italian regions, and both institutional and labour market factors may be considered as lying at the basis of the high regional heterogeneity. This paper aims at understanding more in depth the uneven allocation of time by gender in Italian households. For this purpose we propose a model on the partners? allocation of time, that takes into account the simultaneity of partners? allocation of time decisions, as well as the issue of censored observations in some partenrs? uses of time. In order to estimate this model, we use IT SILC 2007 data that provides us with information on income and hours of work as well as on other relevant socio-demographic variables, maintaining the significance at regional level. This also allows us to analyze the contribution of institutional factors (like the heterogeneous distribution of childcare services in Italy and labour market differences) and interaction with various dimensions of wellbeing. Our findings suggest that an increase in women?s wages affects women?s working time, both by directly increasing women?s paid hours of work, and decreasing the time devoted to household activities and indirectly via a more equal distribution of unpaid work within the couple. The presence of children in the household tends to reduce women?s paid work, while having a positive effect on the time spent by the husband in paid work and on both partners? supply of unpaid work. We also note that the availability of childcare services represents the most relevant factor affecting women?s participatory decisions as well as their hours of paid work.time use; economics of gender; labour supplì;

Transnational social capital and FDI.Evidence from Italian associations worldwide

Emigrant associations abroad are structured nodes of social networks; they are manifestations of a transnational social capital. Italian associations are numerous, spread across several countries, in some cases they exist since the end of the nineteenth century, and may count on high numbers of members. Also, they are robustly tied to the home country. This paper assesses the effects of Italian associations abroad on the bilateral FDI between Italy and the countries of settlement of Italian diaspora. The main results are that these effects are positive and strongly significant, especially for the inward FDI and relatively to the countries with the oldest associationsinternational migration, FDI, Italy