Income distribution, growth and financialization: the Italian case.

The paper investigates whether the current decline of the Italian economy could be traced back to financialization. In principle financialization could not be so important for an economy in which many firms are not quoted in the stock exchange and for which shareholders' interests should not matter. The author argues that financialization may have deep effects in such an environment by changing the perceived financial norm and the target return on capital. The author draws on a model by Lavoie (1995) extending it to an open economy. She uses this model by looking at the effects of an appreciation, thus replicating the appreciation of the euro in the last years and its possible effects on the Italian economy. The results of such an appreciation would be a fall in the rate of growth, accumulation and in the realized rate of profit. This picture, however, does not fit in well with some stylized facts. In Italy, the rate of growth and the capital accumulation have slowed down while the rate of profit and the profit share have clearly increased. The increase concerns the average profit share and the average profit rate while indeed the profit rate is declining in the manufacturing sectors, but rising in the services sector. At this point a different interpretation is presented, which is no more based on the financialization hypothesis but rather on the increase in the degree of monopoly power in the Italian industrial sectors, given the increase in the mark-up. This process would have been favoured by the privatization process of previously public enterprises. The author shows what might have happened by using a model by Dutt (1995) with two sectors. In this model in the long-run the accumulation of capital is still governed by aggregated utilization and profitability, but the allocation of capital among sectors and their growth depends on the profit rate differential. The profit rate differential might have shifted resources to the service sectors, which would have been favoured by the privatization process. In this case, financialization would be a consequence of the increase in monopolistic competition, which in turn could be responsible for the decline.

Business Sector Debt, Capital Markets Expansion and Liberalization in South Korea: Evidence from National Accounts Data

In this work the�sources of investment financing in South Korea in the period 1970-1997 are calculated�following the same method used by Colin Mayer and Jenny Corbett in their influential works. An anomaly of the Korean case is stressed. In the period before the financial crisis of 1997 the gross share of loans in investment finacning does not decrease while the net one�instead does. The reason may be the accumulation of financial (bank and other institutions) assets on the assets side of the corporate sector. This in turn may be due to timing of the�liberalization of interest rates�in that country. Interest rates on banks liabilities were liberalized before interest rates on bank assets. As a consequence of this timing the latter increased to very high levels while the former stayed constant.Investment financing,Financial liberalization,Net proportions,National accounts

The monetary policy response to the financial crisis in the Euro area and in the United States: a comparison

The paper aims at drawing a comparison between the reactions to the recent financial crisis by the European Central Bank and by the Federal Reserve. Though the tools used have been largely the same, the quality and quantity of the interventions has been very different depending on the different structure of financial markets in the two areas. In particular, the ECB has not replaced private markets that did not work any more as the Federal Reserve did. The policy design behind those interventions is di�erent too. The Federal Reserve through the quantitative easing policy aims at lowering both short term and long term interest rates and has recently stated that this policy may continue in the future. The European Central Bank does not justify in this way its own interventions in the market and apparently seems not have given up its traditional goal, fighting inflation. The evolution of financial markets both in the U.S and in Europe after the crisis reflect different initial conditions and expectations for the future. Thus many differences in the structure of markets and in policy design exist. This, however, will not save Europe from the consequences of future disorders in the Us markets. The crisis spread to Europe largely because of the global dimension of the inter-bank market. Given that the interconnections between European and US banks have survived the financial crisis, nothing ensures that the same thing will not happen again.

Exchange rate policy and income distribution in an open developing economy

In this work we are going to deal with the issue of the distribution of income in an open economy within a simplified macroeconomic model with constant prices. This type of model could apply to middle-income developing countries, which have succeeded in fighting inflation through a policy of high interest rates. It will be assumed that the implicit target of monetary policy now becomes the exchange rate and interest rates are set at a high level to lower the exchange rate (defined as the price of the foreign currency in terms of the domestic one). Even if this strategy may work it may produce negative effects on output growth and the distribution of income. The lowering of the exchange rate target would have the following effects on distribution. It would cause a reduction in the growth of output, it would lower the wage rate. Domestically-produced income distributed abroad should increase instead. The domestic interest rate would rise only for suitable small values of the parameter, which links imports to income. The effect on the profit share is indeed uncertain.Exchange rate target,Administrative incentive pricing,Income distribution

Exchange rate policy and income distribution in an open developing economy

In this work we are going to deal with the issue of distribution of income in an open economy within a simplified macroeconomic model with constant prices.this type of model could apply to middle-income developing countries, which have succeeded in fighting inflation through a policy of high interest rates.It will be assumed that the implicit target of monetary policy now becomes the exchange rate and interest rates are set to a high level to lower the exchange rate. Even if this strategy may work it may produce negative effects on output growth and the distribution of income.The lowering of the exchange rate target would have the following effects on distribution.It would cause a reduction in the growth of output,it would lower the wage rate.Domestically-produced income distributed abroad should increase instead.The domestic interst rate would rise only for suitable small values of the parameter which links imports to income.The effect on the profit share is indeed uncertain.exchange rate policy balance of payments income distribution developing countries

Income distribution in an open developing economy: do monetary and exchange rate policy matter?

In this work we are going to deal with the issue of the distribution of income in an open economy within a simplified macroeconomic model with constant prices. This type of model could apply to middle-income developing countries, which have succeeded in fighting inflation through a policy of high interest rates. It will be assumed that the target of monetary policy now becomes the exchange rate and interest rates are set at a high level to lower the exchange rate (defined as the price of the foreign currency in terms of the domestic one). Even if this strategy may work it may produce negative effects on output growth and the distribution of income. The lowering of the exchange rate target would have the following e®ects on distribution. It would cause a reduction in the growth of output, it would lower the wage share. The share of domestically produced income distributed abroad should increase instead. The domestic interest rate share would rise only for suitable small values of the parameter, which links imports to income. The effect on the capital share is indeed uncertain

Exchange rate policy and income distribution in an open developing economy

In this work we are going to deal with the issue of distribution of income in an open economy within a simplified macroeconomic model with constant prices.this type of model could apply to middle-income developing countries, which have succeeded in fighting inflation through a policy of high interest rates.It will be assumed that the implicit target of monetary policy now becomes the exchange rate and interest rates are set to a high level to lower the exchange rate. Even if this strategy may work it may produce negative effects on output growth and the distribution of income.The lowering of the exchange rate target would have the following effects on distribution.It would cause a reduction in the growth of output,it would lower the wage rate.Domestically-produced income distributed abroad should increase instead.The domestic interst rate would rise only for suitable small values of the parameter which links imports to income.The effect on the profit share is indeed uncertain

Engineering Reconnaissance Following the October 2016 Central Italy Earthquakes - Version 2

Between August and November 2016, three major earthquake events occurred in Central Italy. The first event, with M6.1, took place on 24 August 2016, the second (M5.9) on 26 October, and the third (M6.5) on 30 October 2016. Each event was followed by numerous aftershocks. As shown in Figure 1.1, this earthquake sequence occurred in a gap between two earlier damaging events, the 1997 M6.1 Umbria-Marche earthquake to the north-west and the 2009 M6.1 L’Aquila earthquake to the south-east. This gap had been previously recognized as a zone of elevated risk (GdL INGV sul terremoto di Amatrice, 2016). These events occurred along the spine of the Apennine Mountain range on normal faults and had rake angles ranging from -80 to -100 deg, which corresponds to normal faulting. Each of these events produced substantial damage to local towns and villages. The 24 August event caused massive damages to the following villages: Arquata del Tronto, Accumoli, Amatrice, and Pescara del Tronto. In total, there were 299 fatalities (www.ilgiornale.it), generally from collapses of unreinforced masonry dwellings. The October events caused significant new damage in the villages of Visso, Ussita, and Norcia, although they did not produce fatalities, since the area had largely been evacuated. The NSF-funded Geotechnical Extreme Events Reconnaissance (GEER) association, with co-funding from the B. John Garrick Institute for the Risk Sciences at UCLA and the NSF I/UCRC Center for Unmanned Aircraft Systems (C-UAS) at BYU, mobilized a US-based team to the area in two main phases: (1) following the 24 August event, from early September to early October 2016, and (2) following the October events, between the end of November and the beginning of December 2016. The US team worked in close collaboration with Italian researchers organized under the auspices of the Italian Geotechnical Society, the Italian Center for Seismic Microzonation and its Applications, the Consortium ReLUIS, Centre of Competence of Department of Civil Protection and the DIsaster RECovery Team of Politecnico di Torino. The objective of the Italy-US GEER team was to collect and document perishable data that is essential to advance knowledge of earthquake effects, which ultimately leads to improved procedures for characterization and mitigation of seismic risk. The Italy-US GEER team was multi-disciplinary, with expertise in geology, seismology, geomatics, geotechnical engineering, and structural engineering. The composition of the team was largely the same for the two mobilizations, particularly on the Italian side. Our approach was to combine traditional reconnaissance activities of on-ground recording and mapping of field conditions, with advanced imaging and damage detection routines enabled by state-of-the-art geomatics technology. GEER coordinated its reconnaissance activities with those of the Earthquake Engineering Research Institute (EERI), although the EERI mobilization to the October events was delayed and remains pending as of this writing (April 2017). For the August event reconnaissance, EERI focused on emergency response and recovery, in combination with documenting the effectiveness of public policies related to seismic retrofit. As such, GEER had responsibility for documenting structural damage patterns in addition to geotechnical effects. This report is focused on the reconnaissance activities performed following the October 2016 events. More information about the GEER reconnaissance activities and main findings following the 24 August 2016 event, can be found in GEER (2016). The objective of this document is to provide a summary of our findings, with an emphasis of documentation of data. In general, we do not seek to interpret data, but rather to present it as thoroughly as practical. Moreover, we minimize the presentation of background information already given in GEER (2016), so that the focus is on the effects of the October events. As such, this report and GEER (2016) are inseparable companion documents. Similar to reconnaissance activities following the 24 August 2016 event, the GEER team investigated earthquake effects on slopes, villages, and major infrastructure. Figure 1.2 shows the most strongly affected region and locations described subsequently pertaining to: 1. Surface fault rupture; 2. Recorded ground motions; 3. Landslides and rockfalls; 4. Mud volcanoes; 5. Investigated bridge structures; 6. Villages and hamlets for which mapping of building performance was performed

Reconnaissance of 2016 Central Italy Earthquake Sequence

The Central Italy earthquake sequence nominally began on 24 August 2016 with a M6.1 event on a normal fault that produced devastating effects in the town of Amatrice and several nearby villages and hamlets. A major international response was undertaken to record the effects of this disaster, including surface faulting, ground motions, landslides, and damage patterns to structures. This work targeted the development of high-value case histories useful to future research. Subsequent events in October 2016 exacerbated the damage in previously affected areas and caused damage to new areas in the north, particularly the relatively large town of Norcia. Additional reconnaissance after a M6.5 event on 30 October 2016 documented and mapped several large landslide features and increased damage states for structures in villages and hamlets throughout the region. This paper provides an overview of the reconnaissance activities undertaken to document and map these and other effects, and highlights valuable lessons learned regarding faulting and ground motions, engineering effects, and emergency response to this disaster