Italy: The Search for a Sustainable PAYG Pension System

During the 1990s the reform of the pension system had been at the core of the effort to consolidate Italian public finances and ensure long-term fiscal sustainability. The reform process began in 1992 when a quarter of perspective public sector pension liabilities was abruptly cancelled. A second major reform, in 1995, aimed primarily at reducing distortions in the labour market and at making the system more fair. This latter reform began a shift from a defined benefit to a defined contribution system. The Italian system will remain on a PAYG basis, but each individual will hold a notional social security account. Pensions will be related to accumulated contributions and to retirement age. The introduction of the defined contribution pensions aims at mimicking the incentive effects of funded pensions, while avoiding the need to pre-fund future liabilities. Over the last decade, pension expenditure trends have been substantially adjusted down. Microeconomic incentives have been improved. Distributive effects have been largely redesigned. However, the reform process is not yet over. Italian pension spending, which is proportionally higher than that in any other western industrial country, is still expected to increase as a share of GDP. This also depends on the very low fertility rate and the relatively high life expectancy. Moreover, some reforms have been implemented without adequate analysis of their implications and they include solutions which may result unsustainable in the long-run. This lengthy reform process generates uncertainty, limits the microeconomic benefits of the actuarial approach introduced by the 1995 reform, and induces elderly workers to retire from the work-force as soon as they are in the condition to for fear of possible cuts in benefits. An actuarially based pension system, such as that introduced in Italy in 1995, can deliver the expected labour market benefits only if the link between contributions and benefits is transparent and perceived as stable by citizens. This may not be the case in Italy, where a large number of workers are not affected by the new pension regime and where public opinion expects further reforms.

Public investment, the Stability Pact and the ‘golden rule’

The fiscal rules set in the Treaty of Maastricht and in the Stability and Growth Pact have sometimes been criticised as an excessively binding constraint for appropriate counter-cyclical action. The risk that the rules may permanently reduce the public sector’s contribution to capital accumulation has also been pointed out. In this framework, the adoption of a ‘golden rule’ has been suggested. Starting from the recent debate, this paper tackles two questions: (a) the implications of the Pact for public investment and (b) the pros and cons of introducing a golden rule in EMU’s fiscal framework, given the objectives of low public debts and adequate margins for a stabilising budgetary policy. The analysis suggests that the rules set in the Treaty and in the Pact may negatively influence public investment spending. However, the golden rule, although intuitively appealing, does not seem to be an appropriate solution to the problem.

A normal form analysis in a finite neighborhood of a hopf bifurcation: on the center manifold dimension

The problem of determining the bounds of applicability of perturbation expansions in terms both of the system parameters and the state-space variable amplitude is a key point in the perturbation analysis of nonlinear systems. In the present paper an analysis in a finite neighborhood of a Hopf bifurcation is presented in order to analyze the conditions under which a Normal Form zero-divisors-based approach fails to describe the local dynamics and, therefore, a small divisor approach is required. The condition of “smallness” referred to the divisors is analyzed from both a qualitative and a quantitative point of view. Finally, a simple but effective analytical and numerical example is introduced to illustrate the theoretical issues along with an interpretation within a codimension-two framework

La potenza del virtuale tra media e literatura

In this article, we will try to demonstrate that there are strong analogies between literature and new media, as they were both born to satisfy a human need. We will try to show that the inglorious world of media and the prestigious literary universe are walking – without knowing – in the same direction. Therefore, it would be easier to confute the recent theory that declares the death of literature after the rise of new media. Only an honest and interdisciplinary dialogue can reveal all sorts of hidden structural homologies, uncovering new creative horizons.Il nostro obiettivo, in questo articolo, è quello di introdurre all’indagine circa il rapporto di analogie che intercorrono tra letteratura e nuovi media, cercando di dimostrare che vi sono delle interessanti quanto insospettabili omologie strutturali che rispondono ad un’unica esigenza umana. Si tenterà di tracciare le direzioni di un percorso che il dissacrante mondo dei media e il prestigioso universo letterario a loro insaputa condividono, affinché diventi più facile confutare le recenti teorie secondo le quali la letteratura muore in seguito all’avvento dei nuovi media. Solo un onesto dialogo interdisciplinare può far riaffiorare l’elaborato sistema di vasi comunicanti checollegano, fin da tempi non sospetti, questi due mondi apparentemente tanto lontani, aprendo così nuovi creativi orizzonti

Rainy day funds: can they make a difference in Europe

Rainy Day Funds (RDFs) have an important role in the USA. They allow States – which usually have rules requiring a balanced budget for current revenue and spending – to limit procyclical fiscal policies. This paper examines the possible role of RDFs in the European fiscal framework. The analysis suggests that RDFs would not fundamentally alter the incentive problems at the root of the difficulties in the implementation of the Stability and Growth Pact. Moreover, RDFs are not an option for countries with high deficits. However, for low-deficit countries, RDFs can lessen the rigidity of the 3 per cent threshold in bad times. RDFs could be introduced on a voluntary basis at the national level and could contribute to make the rules more country-specific. The introduction of RDFs would require a change in the definition of the “Maastricht deficit”: deposits and withdrawals should be considered respectively as budget expense and revenue. In this way, the balances held in RDFs could be spent in bad times without an increase in the deficit. To ensure that RDFs are not used opportunistically, deposits should only be made out of budget surpluses and circumstances allowing withdrawals should be specified ex ante.rainy day funds, fiscal rules, EMU

Revisiting the Stability and Growth Pact: grand design or internal adjustment?

The Stability and Growth Pact is under fire. Problems have appeared in sticking to the rules. Proposals to reform the Pact or ditch it altogether abound. But is the Pact a flawed fiscal rule? Against established criteria for an ideal fiscal rule, its design and compliance mechanisms fare reasonably well. Where weaknesses are found, they tend to reflect trade-offs typical of supra-national arrangements. In the end, only a higher degree of fiscal integration would remove the inflexibility inherent in the recourse to predefined budgetary rules. This does not mean that the EU fiscal rules cannot be improved. However, given the existing degree of political integration in EMU, internal adjustment rather than attempting to re-design the rules from scratch appears a more suitable way to bring about progress. Redefining the medium term budgetary target, improving transparency, tackling the pro-cyclical fiscal bias in good times, moving towards non-partisan application of the rules and improving transparency in the data can achieve both stronger discipline and higher flexibility.sgp, stability and growth pact, Buti, Eijffinger, Franco

The Reliability of EMU FIscal Indicators: Risks and Safeguards

The reliability of EMUÂ’s fiscal indicators has been questioned by recent episodes of large upward deficit revisions. This paper discusses the causes of such revisions in order to identify ways to improve monitoring. The computation of EMUÂ’s deficit indicator involves the assessment of accrued revenue and expenditure and the identification of transactions in financial assets. Both can open margins for opportunistic accounting. However, crosschecks between deficit and changes in gross nominal debt (the other fiscal indicator used in EMU) can reduce the scope for window dressing. Simple comparison of deficit and changes in debt can readily spotlight large inconsistencies in fiscal data. Nevertheless, consistency checks must go deeper than simple comparison, since different items in the reconciliation account between deficit and change in debt can offset each other. Econometric evidence suggests that such offset may indeed have been used to reduce the visibility of deficit-specific window dressing. Attention to the quality of statistics has increased in recent years, also in the context of the reform of the Stability and Growth Pact. In this context, the paper argues that detailed analysis of the reconciliation account between deficit and change in debt is crucial to the effectiveness of monitoring.EMU, fiscal rules, fiscal indicators, stock-flow adjustment

Stratifying On-Shell Cluster Varieties: the Geometry of Non-Planar On-Shell Diagrams

The correspondence between on-shell diagrams in maximally supersymmetric Yang-Mills theory and cluster varieties in the Grassmannian remains largely unexplored beyond the planar limit. In this article, we describe a systematic program to survey such 'on-shell varieties', and use this to provide a complete classification in the case of $G(3,6)$. In particular, we find exactly 24 top-dimensional varieties and 10 co-dimension one varieties in $G(3,6)$---up to parity and relabeling of the external legs. We use this case to illustrate some of the novelties found for non-planar varieties relative to the case of positroids, and describe some of the features that we expect to hold more generally.Comment: 35 pages, 70 figures, and 1 table; also included is a file with explicit details for our classification. Signs corrected in two residue theorems, and a new interpretation (and formula) given for the las