Non-linear adjustments in fiscal policy

This paper provides evidence that the Italian public finances are sustainable, as the country meets its intertemporal budget constraint. Nevertheless, the burden of correcting budgetary disequilibria is entirely carried by changes in taxes, which can have some detrimental economic effects, rather than changes in government spending or policy mixes. Our non-linear analysis, in particular, shows that taxes adjust more rapidly when deviations from the equilibrium level get larger, and that they are downward inflexible not only with respect to their long-run level, but also during periods of decreasing economic growth. In order to correct the undesirable trend of high fiscal pressure and high public debt in Italy, structural expenditure reforms aiming at a higher degree of government expenditure adjustment are needed. This would also relax the asymmetries reported in the paper

Asymmetric and Non-Linear Adjustments in Local Fiscal Policy

We analyse the revenue-expenditure patterns of local governments, allowing for asymmetric and non-linear adjustments of local spending and taxation to disequilibrium errors. Our results provide evidence of a downward inflexibility of both local government spending and local taxation, pointing to a budget-maximising local government.fiscal federalism, fly-paper effect, non-linear time-series, asymmetric adjustment

Asymmetric and non linear adjustment in the revenue expenditure models

The purpose of this paper is to empirically analyse the revenue-expenditure models of public finance by considering the possibility of non-linear and asymmetric adjustment. A long-run relationship between general government expenditure and revenues is identified for Italy. Following system-wide shocks, the estimated relationship adjusts slowly to equilibrium, mainly due to complex administrative procedures that add to the sluggishness of tax collection and undermine the effective monitoring of public spending. Exogeneity of public expenditure implies that taxes rather than spending, carry the burden of short-run adjustment to correct budgetary disequilibria. Allowing for non-linear adjustment and the possibility of multiple equilibria, our findings show evidence of asymmetric adjustment around a unique equilibrium. In particular, we find that when government expenditure is too high, adjustment of taxes takes places at a faster rate than when it is too low. Further, there is evidence of a faster adjustment when deviations from the equilibrium level get larger, pointing to a Leviathan-style, revenue-maximiser government

Debt Sustainability and Financial Crises: Evidence from the GIIPS

We assess the sustainability of the public finances of Greece, Ireland, Italy, Portugal and Spain (GIIPS), allowing for possible non-linearities in the form of threshold behaviour of the fiscal authorities. We provide some evidence of fiscal sustainability when debt gets “too high” relative to a threshold which is not necessarily fixed but varies with the level of debt relative to its recent history and/or the occurrence of a financial crisis.debt sustainability, financial crisis

Non-linear real exchange rate effects in the UK labour market

Using data over the 1973q1-2004q1 period, this paper identifies an important role for the real exchange rate in affecting UK labour market conditions. When the real exchange rate is undervalued, short-run unemployment falls as firms respond to an improvement in domestic competitiveness by increasing their demand for labour. The unemployment response to the real exchange rate deviations occurs outside a narrow interval band. To the extent that the real exchange rate equation reflects monetary policy considerations, our results imply that unemployment can be targeted by economic policy. Our results also suggest that when the real exchange rate is undervalued, workers respond to an improvement in domestic competitiveness by demanding and getting higher wages. Again, this effect is non-linear.Real exchange rate; unemployment; monetary policy; Smooth Transition Vector Error Correction Model.

Spend-and-Tax Adjustments and the Sustainability of the Government's Intertemporal Budget Constraint

We apply non-linear error-correction models to the empirical testing of the sustainability of the government’s intertemporal budget constraint. Our empirical analysis, based on Italy, shows that the Italian government is meeting its intertemporal budget constraint, in spite of the high levels of public debt. Nevertheless, the burden of correcting budgetary disequilibria is entirely carried out by changes in the average tax rate, with a weakly exogenous government spending, possibly determined by the political process. We document some rigidities of the tax instrument, in terms of downward inflexibility of the average tax rate, not only with respect to its long-run level, but also during periods of decreasing economic growth. Further, we provide some evidence in favour of a non-linear adjustment towards a sustainable long-run equilibrium, as the average tax rate adjusts faster the farther away it is from the equilibrium.intertemporal budget constraint, sustainability, non-linear error-correction, fiscal reaction function

Debt Sustainability and Financial Crises: Evidence from the GIIPS

We assess the sustainability of the public finances of Greece, Ireland, Italy, Portugal and Spain (GIIPS), allowing for possible non-linearities in the form of threshold behaviour of the fiscal authorities. We provide some evidence of fiscal sustainability when debt gets “too high” relative to a threshold which is not necessarily fixed but varies with the level of debt relative to its recent history and/or the occurrence of a financial crisis. However, the Greek and Italian debt-to-GDP threshold levels (over which adjustment takes place) exceed 87% and rise further in periods of financial crises. This arguably adds to international investors’ concerns, and as a result, raises the yields demanded for holding Greek and Italian debt. As debt is rolled over at high interest rates, fiscal prospects worsen making default more likely and adding to contagion effects from one Eurozone country to another.debt sustainability, financial crisis

A coupled CFD approach for combustor-turbine interaction

The current approach in the industry to numerically investigate the flow in a gas turbine considers each component, such as combustor and turbine, as a stand-alone part, involving no or very minor interactions with other parts, mainly applied through static boundary conditions. Efficient and very specialised CFD codes have been developed in the past to address the different flow characteristic occurring in the different regions of the engine. In order to meet the future requirements in terms of fuel consumption and pollutants emissions, an integrated approach capable of capturing all the possible interactions between different components is necessary. An efficient and accurate way to achieve integrated simulations is to couple already existing specialised codes in a zonal type of coupling. In this Thesis work a methodology to couple an incompressible/low-Mach number pressure-based combustion code with a compressible density-based turbomachinery code for industrial application has been developed. In particular two different couplings have been implemented: the first, based on the exchange of existing boundary conditions through files, comes as a completely separated tools from the original codes, of which no modifications are required, and it is applied to steady state simulations; the second instead, based on the exchange of boundary conditions and body forces through message passing, requires some modifications of the source codes and it is applied to both steady and unsteady cases. A simple analysis shows that not all the primitive variables can be made continuous at the coupling interface between the two codes and a compromise was found that allows minor discontinuity in some of the variables while achieving mass flow conservation and continuity of the temperature profiles. The coupling methodology has been applied to a simplified but realistic industrial case, consisting of a RQL (Rich Burn - Quick quench - Lean burn) combustor coupled with the first stage of the HP turbine. The analysis of the steady case has shown that the combustor field is affected as far as 150% axial chord lengths upstream of the blades leading edge, affecting RTDF and OTDF at the interfaces. In the turbine stage significant differences in both efficiency and degree of reaction were found in the coupled cases with respect to standard standalone simulations using radial inlet profiles. The analysis of the unsteady simulation has instead shown the hot streaks behaviour across the turbine, that are only partially mitigated by the stator blades and, due to segregation effect of hot and cold gases, migrate towards the pressure side of the rotor blades

The structure of problem-solving knowledge and the structure of organisations

This work presents a model of organisational problem solving able to account for the relationships between problem complexity, tasks decentralilzation and problem solving efficiency. Whenever problem solving requires the coordination of a multiplicity of interdependent elements, the varying degrees of decentralization of cognitive and operational tasks shape the solution which can be generated, tested and selected. Suboptimality and path-dependence are shown to be ubiquitous features of organisational problem solving. At the same time, the model allows a precise exploration of the possible trade-offs between decompostion patterns and search efficiency involved in different organisational architectures.-

Esbrinar entre l'(in)visible. Una investigació sobre els límits del disseny

En un mundo sobrecargado de carteles, productos, imágenes y experiencias, ¿puede existir todavía el umbral de lo invisible? Y, sobre todo, ¿qué sucede cuando el diseño se topa con lo imperceptible, lo complejo, lo infinitamente grande/pequeño, lo opuesto a la intuición? A partir de una práctica de comisariado y no académica, los dos autores presentan y analizan su trabajo y su visión en función de los antecedentes de la investigación de su exposición "(In)visible Design. 100 Stories from the Future and Beyond".In a world overloaded with posters, products, images and experiences, does the threshold of the invisible still exist? And, above all, what happens when design comes up against the imperceptible, the complex, the infintely large/small, the contary to intuition? Starting from an independent and non-academic curatorial practice, both authors present and examine their work and their vision according to the precedents in the research for their exhibition (in)visible Design. 100 Stories from the Future and Beyond.En un món sobrecarregat de cartells, productes, imatges i experiències, pot existir encara el llindar de l'nvisible? I, sobretot: què passa quan el disseny topa amb allò imperceptible, complex, infinitament gran o petit, oposat a la intuïció? A partir d'una pràctica de comissariat i no acadèmica, els dos autors presenten i analitzen la seva tasca i la seva visió en funció dels antecedents d'investigació de la seva exposició "(In)visible Design. 100 Stories from the Future and Beyond"