Sweet Talk: A Theory of Persuasion

This paper introduces a model of sweet talk in which a seller may acquire verifiable information and selectively disclose it to a buyer to negotiate a deal. We start by analyzing a model with common priors in which the seller generates information for two reasons: a trading motive and a profit motive that is, to make trade possible or to increase the gains from it. There exists a negotiation region in which the seller continues to reveal information even if trading is already profitable. We extend the model, allowing for different prior beliefs about the value of the object, arguing that a complementarity between the seller's confidence and the precision of his information endogenously arises. Appointing an optimistic salesman may be costly because he may destroy profitable trading opportunities. We also allow the seller to choose in which market to trade: a matching market with a fixed price or a haggling market. Our model also provides a testable difference between a model of trading with homogenous priors and one with heterogeneous priors and finds application in understanding contracts as reference points.persuasion games; haggling; negotiation; bargaining; heterogeneous priors, overconfidence, consummate and perfunctory performance, verifiable information.

Information sharing in emerging credit markets

This paper examines the lack of information flow in the credit markets of developing countries. We show that the miscoordination among financial intermediaries might explain why lenders don't share their information about the borrowers. The competition effect of more transparency in the market leads to a higher probability of default of the firm, also generating credit rationing.Coordination.

Accountability and Cheap Talk

This paper analyzes a cheap talk model with heterogeneous receivers who are accountable for the correctness of their actions, showing that there exists a truth-revealing equilibrium. This sheds new light on the important role played by elections in shaping politicians' and, more surprisingly, advisor's behaviors in a cheap-talk setting. In deciding which message to send, the advisor is aware that he could use this message to affect the electoral outcome, the manipulation effect, or to shape the first period policy, the influence effect. When the first effect dominates the second there exists an informative equilibrium. In addition, I show that the presence of heterogeneous politicians leads to an increase in voters' welfare as a result of better-informed decisions. I allow the politician to delegate authority to the expert, showing that due to the signaling value of the politician's delegation decision, only corrupt or incompetent incumbents will delegate the second-period decision. Finally, I generalize the results in a number of different directions.cheap talk, corruption, reputation, ideology.

Households’ Indebtedness and Financial Fragility

The paper studies the determinants of international differences in household indebtedness, and inquires whether indebtedness is associated with increased “financial fragility”, as measured by the sensitivity of household arrears and insolvencies to macroeconomic shocks. It also investigates whether financial fragility is affected by institutional factors, such as information sharing arrangements, judicial efficiency and individual bankruptcy regulation. We address these issues by tapping three data sets: (i) cross-country data on household indebtedness; (ii) European panel data for households lending and arrears; and (iii) time series data for household lending and insolvencies in the U.K., the U.S.A. and Germany. Overall, the analysis underscores the importance of institutional arrangements in determining the size and fragility of household credit markets.household debt, financial fragility, arrears, insolvency, information sharing, judicial efficiency, bankruptcy law

The Political Economy of the Yield Curve

This paper proposes a novel method to recover the market's beliefs about the Fed's monetary policy by using the responses of interest rates to economic news. We investigate the differential impact of news over time showing that the impact of this information is time varying, and that the importance of the housing and labor markets has sharply increased after the crisis. We follow a difference-in-difference estimation procedure to test for the presence of political constraints in the U.S., employing as control group the response of the European swap rates to macroeconomic announcements. We provide strong evidence that after the crisis of 2007, the Federal Reserve has been subject to the political pressure exerted by the Congress.Fed, Financial Crisis, Political Pressure, Yield Curve, Political Constraints

Accountability and Cheap Talk

This paper analyzes a cheap talk model with heterogeneous receivers who are accountable for the correctness of their actions, showing that there exists a truth-revealing equilibrium. This sheds new light on the important role played by elections in shaping politicians' and, more surprisingly, advisor's behaviors in a cheap-talk setting. In deciding which message to send, the advisor is aware that he could use this message to affect the electoral outcome, the manipulation effect, or to shape the first period policy, the influence effect. When the first effect dominates the second there exists an informative equilibrium. In addition, I show that the presence of heterogeneous politicians leads to an increase in voters' welfare as a result of better-informed decisions. I allow the politician to delegate authority to the expert, showing that due to the signaling value of the politician's delegation decision, only corrupt or incompetent incumbents will delegate the second-period decision. Finally, I generalize the results in a number of different directions

The Political Economy of the Yield Curve

This paper proposes a novel method to recover the market's beliefs about the Fed's monetary policy by using the responses of interest rates to economic news. We investigate the differential impact of news over time showing that the impact of this information is time varying, and that the importance of the housing and labor markets has sharply increased after the crisis. We follow a difference-in-difference estimation procedure to test for the presence of political constraints in the U.S., employing as control group the response of the European swap rates to macroeconomic announcements. We provide strong evidence that after the crisis of 2007, the Federal Reserve has been subject to the political pressure exerted by the Congress

Accountability and Cheap Talk

This paper analyzes a cheap talk model with heterogeneous receivers who are accountable for the correctness of their actions, showing that there exists a truth-revealing equilibrium. This sheds new light on the important role played by elections in shaping politicians' and, more surprisingly, advisor's behaviors in a cheap-talk setting. In deciding which message to send, the advisor is aware that he could use this message to affect the electoral outcome, the manipulation effect, or to shape the first period policy, the influence effect. When the first effect dominates the second there exists an informative equilibrium. In addition, I show that the presence of heterogeneous politicians leads to an increase in voters' welfare as a result of better-informed decisions. I allow the politician to delegate authority to the expert, showing that due to the signaling value of the politician's delegation decision, only corrupt or incompetent incumbents will delegate the second-period decision. Finally, I generalize the results in a number of different directions

The Political Economy of the Yield Curve

This paper proposes a novel method to recover the market's beliefs about the Fed's monetary policy by using the responses of interest rates to economic news. We investigate the differential impact of news over time showing that the impact of this information is time varying, and that the importance of the housing and labor markets has sharply increased after the crisis. We follow a difference-in-difference estimation procedure to test for the presence of political constraints in the U.S., employing as control group the response of the European swap rates to macroeconomic announcements. We provide strong evidence that after the crisis of 2007, the Federal Reserve has been subject to the political pressure exerted by the Congress

Otra Europa. La política internacional del Partido Comunista Italiano desde el eurocomunismo hasta el final de la Guerra Fría

En aquest article es reconstrueix l’evolució de la política exterior del Partit Co- munista Italià des de principis dels anys setanta fins a la dissolució del partit el 1991. Es re-elaboraran sintèticament els resultats d’una sèrie d’investigacions realitzades per l’autor durant l’última dècada, comparant-los amb altres recents aportacions historiogràfiques. En particular, s’analitzarà la relació del pci amb la “qüestió euro- pea”, a partir del que la historiografia més recent ha identificat com a peculiaritat del comunisme italià: la capacitat de dimensionar la seva acció política en el marc del vincle entre nacional i internacional , construint un univers cultural i una iniciativa capaç de trencar les barreres de l’ortodòxia i les formes de dependència vertical entre l’Estat soviètic i el moviment.This article reconstructs the evolution of the Italian Communist Party’s foreign policy from the early 1970s to the dissolution of the party in 1991.The results of a series of researches carried out by the author in the last decade will be synthetically re-elaborated, comparing them with other recent acquisitions of historiography. In particular, the pci’s relationship with the “European question” will be analysed starting from what the most recent historiography has identified as a peculiarity of Italian communism: the ability to size its political action within the framework of the link between national and international, building a cultural universe and an initiative capable of breaking out of the marxism-leninism orthodoxy and forms of vertical dependence between the Soviet state and the communist movement.En este artículo se reconstruye la evolución de la política exterior del Partido Comunista Italiano desde principios de los años setenta hasta la disolución del partido en 1991. Se reelaborarán sintéticamente los resultados de una serie de in- vestigaciones realizadas por el autor en la última década, comparándolos con otras recientes aportaciones historiográficas. En particular, se analizará la relación del PCI con la “cuestión europea”, a partir de lo que la historiografía más reciente ha iden- tificado como una peculiaridad del comunismo italiano: la capacidad de dimen- sionar su acción política en el marco del vínculo entre nacional e internacional, construyendo un universo cultural y una iniciativa capaz de romper con las barreras de la ortodoxia y las formas de dependencia vertical entre el Estado soviético y el movimiento. &nbsp