The dynamic effects of technological and non technological shocks in the energy sector: a case study for Italy

In this paper we address the question whether fiscal incentives and regulation are the most appropriate tools to increase productivity in energy sector. Doubts exist about whether these are the most effective tools for improving productivity since changes in productivity are usually related to changes in technological progress. We use a vector autoregressive model to study this problem. Our purpose is to identify the shocks which induce movements in productivity, and to measure the productivity response to each shock separately. We use economic theory about long run impacts of different shocks to identify the empirical model. The key indentifying restriction is that the level of productivity is determined in the long run by shocks to technology. We find that productivity responds positively to technological shocks, leading to a transition from one equilibrium to another. Yet, non technological shocks play a minor and transitory role in explaining productivity growth. All these evidences cast doubt on the effectiveness of the current European community policy for development and innovation in energy sector based mainly on fiscal incentives and regulations.Energy Sector, SVAR, Productivity, Shocks.

Pollution control: targets and dynamics.

In this paper I study the e¤ects of environmental regulation which establishes upper and lower binding targets to pollution emissions. Essentially, I deal with the properties of a stochastic model of pollution control in continuous-time under emission targets and uncertainty, emphasizing dynamic nonlinearities. Inside the targets pollution behaves as if it were freely floating until it hits one of the two limits. The model provides three main results. First, I show that binding targets can affect the pollution floating even when the boundaries are currently slack. Solutions of the model show that pollution becomes an S-shaped locus of the fundamentals. Second, I show that binding targets will lead to more stable pollution rate determination within the boundaries, than free floating. Finally, stabilization of pollution is related to the growth rate and volatility of fundamentals, to the sensitivity to expected changes of pollution rate and to the credibility of the authorities in defending the pollution targets.Pollution targets, Optimal stochastic control, Uncertainty, Environmental policy.

An exact consumption rule with liquidity constraints and stochastic income

This model provides a closed form solution to the problem of liquidity constrained consumption with stochastic income. To keep the model tractable we employ a quadratic utility function. Income follows a geometric Brownian motion. The analytical solution exhibits a smooth, non linear, relation between consumption and income along the optimizing path even when the constraint binds. This outcome confirms the assertions in the literature that even liquidity constrained consumers may satisfy the standard Euler equation. But, in our model this result emerges from the analytical solution.Optimal control Stochastic income Liquidity constraints Consumption

Optimal capital stock and financing constraints

In this paper we show that financing constraints affect the optimal level of capital stock even when the financing constraint is ineffective. This happens when the firm rationally anticipates that access to external financing resources may be rationed in the future. We will show that with these expectations, the optimal investment policy is to invest less in any given period, thereby lowering the desired optimal capital stock in the long run.Investment; capital stock; constraints; uncertainty

Sources of Productivity Slowdown in European Countries During 1990s

In this paper we address the question whether the shift in labour supply curve is the only fundamental change capturing the negative correlation between the growth rates of productivity and employment in European countries in the last fifteen years. If this explanation is correct then the labour demand curve did not shift in recent times, keeping other features of the production function unchanged. This is obviously a problem of identification. Thus, in this study we provide some empirical evidence explaining the shifts in labour demand curve over the same period. Our main conclusion is that the sluggish performance of the European economy in the last fifteen years has a common root in the large changes occurred in the labour market. We refer to these changes as technological and non technological shocks. In our model, adverse technological shocks shift the labour demand curve, while positive non technological shocks shift the labour supply curve. These two shifts contribute simultaneously to rise employment and to decrease the growth rate of productivity. Our evidence shows that labour productivity does respond positively to labour demand (technological) shocks and negatively to labour supply (non technological) shocks. Hence, the main result of our study is that both shocks are necessary to provide a complete picture of the employment-productivity trade-off in European countries during the last fifteen years.Productivity slowdown, labour market, SVAR

The Mezzogiorno in the Italian economy over the last twenty years: productivity, accumulation and divergence.

In this paper we shed lights on the economic growth of Mezzogiorno of Italy during the last twenty years. The empirical analyses refer to various aspects of the Mezzogiorno economy: income per capita, labor productivity, public and private accumulation and competitiveness. The main contribution of this paper is to provide a key to explain the actual weackness of Mezzogiorno. More precisely, we argue that the effectiveness of regional policies has been affected by national legal rules that have had different effects across regions. In addition, the effectiveness of regional policies has been diminished by attributing importance to regional governments as control centres of public intervention.Mezzogiorno, growth, accumulation, productivity, regional policy

A note on optimal capital stock and financing constraints

There is a robust literature on the relationship between financing constraints and real investment. Little has been said on the relationship between financing constraints and capital stock in the long run. This note focuses on this last issue. To keep the model tractable, we assume that the firm employs a single input, and this input is used as collateral. We get three main results. Firstly, we show that the optimal capital stock chosen by a firm is affected by financing constraints even when they are slack at the current time. Secondly, we show that the net present value of the potentially constrained firm is always smaller than the one of the never constrained firm. Finally, we find that in the presence of latent financing constraints the firm does not limit itself to reducing its investment when the upper limit is reached. What it actually does is to lower its long run optimal capital stock, amplifying the effects of constraints in the long run

The effects of future financing constraints on capital accumulation: some new results on the constrained investment problem

none2In this paper, we study the effects of future constraints on current investment decisions. Unlike the standard literature on this optimizing problem, we present a model in which firms are neither always constrained nor always unconstrained. We are concerned with those cases where a firm is free from constraints at the current time but expects to face an upper bound at some later date. Using the ‘no arbitrage principle’ in the constrained scenario, we show how to explicitly calculate the optimal investment path switching between regimes. The analytical result shows that the effects of future financing constraints are included in the market value of the firm, and thus are captured by marginal q.openEnrico Saltari; Giuseppe TravagliniEnrico, Saltari; Travaglini, Giusepp

Energy efficiency: measurement and impacts

In this paper we argue that energy efficiency and environmental efficiency are two aspects of the same problem. To show this, we assess the analytical utility of the well-known IPACT and ImPACT models, presenting here a new developed identity named Augmented ImPACT. For Italy, our findings suggest that over the last twenty years the rise of energy efficiency has been accompanied by a controversial consumption of environmental resources and of CO2 accumulation. Specifically, the italian sector of services appears to be highly inefficient. In the second part of the paper we use a VAR model to estimate the impact of energy efficiency on economy, looking at employment value added and polluted emissions. Our results suggest that a rise in energy efficiency can help in improving both economic and environmental scenarios.Contabilità ambientale; efficienza energetica e ambientale; VAR; simulazioni di risposta all'impulso

The productivity gap among European countries.

This paper aims at analyzing Total Factor Productivity (TFP) in four European countries (France, Germany, Italy and the Netherlands) between 1950 and 2011. It uses the common trend - common cycle approach to decompose series in trends and cycles. We find that the four economies share three common trends and a common cycle. Further, we show that in the case of Italy and the Netherlands trend and cycle innovations have a negative relationship that supports the 'opportunity cost' approach to productivity growth, and that trend innovations are generally larger than cycle innovations. Finally, while we do not explore what drives the three common trends, we show that countries' differences in TFP performance in recent years may be due to the so-called "deep"determinants in growth literature such as the presence of efficient mechanisms of creation and transmission of knowledge, international integration, and ecient markets and institutions