Problems of Soft Budget Constraints in Intergovernmental Relationships: The Case of Italy

Problems of `soft budget` constraints in intergovernmental relationships are currently at the frontier of research in local public economics. This paper reviews the Italian experience in the field, starting from the mid-1970s up to the present period, compares it with that of other countries, and uses it to comment upon the state of the literature. The paper argues that the soft budget constraint problem has been a rampant one in Italian local public finance, generating efficiency losses, lack of political accountability and undermining the soundness of public finances. The paper inquires into the causes and possible solutions to the problem, and in particular describes and comments upon the decentralization process of the 1990s. Finally, the Italian debate on fiscal federalism of the 1990s is also reviewed, arguing that some of the suggestions of this debate may be of interest more generally.

Moderating Political Extremism: Single Round vs Runoff Elections under Plurality Rule

We compare single ballot vs dual ballot elections under plurality rule, assuming sincere voting and allowing for partly endogenous party formation. Under the dual ballot, the number of parties is larger but the influence of extremists voters on equilibrium policy is smaller, because their bargaining power is reduced compared to a single ballot election. The predictions on the number of parties and on policy volatility are consistent with data on municipal elections in Italy, where cities with more (less) than 15,000 inhabitants have dual (single) ballots respectively.political extremism

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.

Long memory and nonlinearities in realized volatility: a Markov switching approach.

Goal of this paper is to analyze and forecast realized volatility through nonlinear and highly persistent dynamics. In particular, we propose a model that simultaneously captures long memory and nonlinearities in which level and persistence shift through a Markov switching dynamics. We consider an efficient Markov chain Monte Carlo (MCMC) algorithm to estimate parameters, latent process and predictive densities. The insample results show that both long memory and nonlinearities are significant and improve the description of the data. The out-sample results at several forecast horizons, show that introducing these nonlinearities produces superior forecasts over those obtained from nested models.

Moderating Political Extremism: Single Round vs Runoff Elections under Plurality Rule

We compare single ballot vs dual ballot elections under plurality rule, assuming sincere voting and allowing for partly endogenous party formation. Under the dual ballot, the number of parties is larger but the influence of extremist voters on equilibrium policy is smaller, because their bargaining power is reduced compared to a single ballot election. The predictions on the number of parties and on policy volatility are consistent with data on municipal elections in Italy, where cities with more (less) than 15,000 inhabitants have dual (single) ballots respectively.run-off, municipal elections, political bargaining, property

Who do you Blame in Local Finance? An Analysis of Municipal Financing in Italy

A 1999 reform allowed Italian Mayors to partially substitute a more accountable source of tax revenue (the property tax) with a less transparent one (a surcharge on the personal income tax). Theoretical analysis suggests this should give incompetent Mayors a less costly way to hide themselves, so allowing them to be more easily re-elected. An empirical analysis on Piedmont municipalities confirms these hypotheses.partial decentralization, fiscal federalism, transparency, political behavior

Exit and Voice. Yardstick versus Fiscal Competition across Governments

Politicians are disciplined through the electoral system. But this is often not enough to eliminate political rents. Economists suggest that competition across governments may also help. But intergovernmental competition can take two forms, through tax competition (exit) or yardstick competition (voice). We show these two forms may not, and in general do not, work in the same direction. Tax competition may reduce the screening properties of yardstick competition.

A systematic approach to multiphysics extensions of finite-element-based micromagnetic simulations: Nmag

Extensions of the basic micromagnetic model that include effects such as spin-current interaction, diffusion of thermal energy or anisotropic magnetoresistance are often studied by performing simulations that use case-specific ad-hoc extensions of widely used software packages such as OOMMF or Magpar. We present the novel software framework 'Nmag' that handles specifications of micromagnetic systems at a sufficiently abstract level to enable users with little programming experience to automatically translate a description of a large class of dynamical multifield equations plus a description of the system's geometry into a working simulation. Conceptually, this is a step towards a higher-level abstract notation for classical multifield mutliphysics simulations, similar to the change from assembly language to a higher level human-and-machine-readable formula notation for mathematical terms (FORTRAN) half a century ago. We demonstrate the capability of this approach through two examples, showing 1) a reduced dimensionality model coupling two copies of the micromagnetic sector and 2) the computation of a spatial current density distribution for anisotropic magnetoresistance (AMR). For cross-wise validation purposes, we also show how Nmag compares to the OOMMF and Magpar packages on a selected micromagnetic toy system. We furthermore, briefly discuss the limiations of our framework and related conceptual questions