Market-based lobbying: Evidence from advertising spending in Italy
Stefano DellaVigna, Ruben Durante, Brian Knight, Eliana La Ferrara 09 March 2014
Firms hoping for regulatory favours may direct their business purchases towards firms controlled by politicians, who benefit from the additional revenue. This column provides evidence from Italy consistent with this channel. It shows that the share of advertising on Berlusconi’s televisions increased while he was in power, and this even more so in the most regulated industries.
The policy debate abounds with discussions on conflict of interests faced by politicians. The scope of the problem is global, in that conflicts of interest are found in industrialised as well as developing countries. And it is complex; there are multiple ways in which conflict of interest can manifest itself.
Politics and economics
Italy, Berlusconi, lobbying
Remittances and vulnerability in developing countries: Results from a new dataset on remittances from Italy
Giulia Bettin, Andrea F Presbitero, Nikola Spatafora 10 February 2014
Remittances are one of the most important financial flows to developing countries – more than three times the level of official development assistance. This column presents recent research on remittance flows from Italy. Their limited volatility and countercyclical behaviour with respect to macroeconomic conditions in the recipient country help mitigate developing countries’ vulnerability to external shocks. Better access to financial services for migrants can foster remittance flows.
Remittances from migrant workers currently represent one of the most important financial flows to developing countries. They can play an important role in pulling millions of families out of poverty. It is therefore critical to identify the key factors affecting remittances, as well as the barriers to these flows (Beck and Martinez Peria 2009 ). In particular, it is important to understand how remittances depend on macroeconomic conditions in the migrants’ host country and country of origin, and how they were affected by the global financial crisis.
Italy, migration, global financial crisis, financial development, Remittances
Productivity in Italy: The great unlearning
Fadi Hassan, Gianmarco I.P. Ottaviano 30 November 2013
The long-lasting stagnation in Italy has often been explained by the country’s lost of competitiveness, but focus on total factor productivity has been scarce. This column discusses the effect of capital and labour misallocation on the productivity slowdown. Such misallocation could not result from labour rigidity, but could be due to limited ICT investment and penetration. Rigid non-meritocratic management practices can greatly affect ICT exploitation, and subsequently – overall productivity growth.
Italy is often regarded as the sleeping beauty of Europe -- a country rich in talent and history, but suffering from a long-lasting stagnation. Italian per-capita income as percentage of the EU15 average has steadily declined since 1994, reaching 84% of EU15 average in 2012. However, this pattern is a novelty compared to previous decades. Italy was the best growth performer among major European partners in the 70s and 80s, but in the 90s and the 2000s it turned to be the worst performer. Why did that happen?
Europe's nations and regions Productivity and Innovation
Italy, productivity, Management, ICT investment
Unity in diversity: Protecting the common market with divergent macroprudential policies
Aerdt Houben, Jan Kakes 30 July 2013
Financial cycles have increasingly diverged across members of the Eurozone. National macroprudential tools are thus key to managing financial imbalances and protecting Europe’s economic integration. This column discusses research suggesting that reasonable macroprudential policies by the GIIPS countries in the euro’s first decade would have helped avoid much pain in Italy, Portugal and Spain. Greece’s public debt problems were far too large and its banks could not have been shielded with macroprudential policies.
The credit crisis and ensuing sovereign crisis powerfully illustrate the limitations of traditional macroeconomic policies to contain financial imbalances. Despite debate on the desirability to dampen credit cycles and asset-price fluctuations, countries have long been reluctant to include this in policy objectives.
Global crisis International finance
Italy, Spain, Ireland, Greece, Eurozone crisis, Portugal, macroprudential tools, GIIPS
Going beyond the mystery of Italy’s price-competitiveness indicators
Claire Giordano, Francesco Zollino 18 July 2013
Since the mid-2000s competitiveness indicators for Italy have been providing conflicting signals. This column argues that producer prices and labour costs have actually moved hand in hand since 1992, and that the rise in the real effective exchange rate based on labour costs can be attributed to price-cost divergences in its main trading partners. Due to the internationalisation of production processes and fading share of labour in overall costs, price-based indicators may be more appropriate to assess external competitiveness.
Assessing Italy’s price competitiveness is becoming a puzzling challenge. Among others, Paul Krugman (2012) has questioned the reliability of the Italian cost-based indicators pinpointing their links with the “[country’s] mysterious productivity collapse”. Bayoumi et al. (2011) also claimed that “[w]hile Italy’s competitiveness does appear to have eroded [since 1995], the size of this effect is, frankly, anyone’s guess”.
Exchange rates International trade
Italy, competitiveness, economic indicators
The roots of the Italian stagnation
Paolo Manasse 19 June 2013
It’s currently very trendy in Italy to blame Angela Merkel, Mario Monti, and austerity measures for the current recession. This column argues that while the severity of the downturn is clearly a cyclical phenomenon, the inability of the country to grow out of it is the legacy of more than a decade of a lack of reforms in credit, product and labour markets. This lack of reform has suffocated innovation and productivity growth, resulting in wage dynamics that are completely decoupled from labour productivity and demand conditions.
Italy is currently facing its worst recession in recent history, having lost about 8.5% of GDP between 2007 and 2013. The current situation is, to a large extent, the result of the Eurozone crisis and of the tough fiscal-austerity measures introduced across Europe, and particularly in Italy. Since 2007, the Italian primary balance improved by 3.3 points of potential GDP according to the OECD, almost exclusively through tax increases.
Europe's nations and regions
Italy, competitiveness, Eurozone crisis
From sovereign turmoil to private-sector woes: Italian sovereign spreads and their pass-through to bank lending conditions
Edda Zoli 15 June 2013
What has driven Italian sovereign spreads movements? This column presents new research looking into increased volatility in sovereign debt since the summer of 2011. Shocks in investor risk appetite, news related to the Eurozone debt crisis, and consistently bad news in Italy, have been important drivers of Italian sovereign spreads. These findings mean that we need to reduce country-specific vulnerabilities as well as sorting out the Eurozone.
Volatility in the Italian sovereign-debt market intensified in the summer of 2011, with ten-year government bond spreads climbing from below 200 basis points in June to over 500 at end-2011 and falling again in July 2012. In January of this year, they fell further to below 300 basis points. The sovereign turmoil ignited a vicious cycle of rising funding costs for banks, increasing borrowing costs for firms and households, and contracting credit and output.
Europe's nations and regions
Italy, sovereign debt, banking, lending
Are Germans poorer than other Europeans? The principal Eurozone differences in wealth and income
Giovanni D'Alessio, Romina Gambacorta, Giuseppe Ilardi 24 May 2013
The ECB’s recent survey on household finances and consumption threw up some unexpected results – counter-intuitively, the average German household has less wealth than the average Mediterranean household. In line with a recent VoxEU.org contribution from De Grauwe and Ji, this article analyses the principal differences in wealth and income between the main Eurozone countries.
The Household Survey (European Central Bank 2013) is a joint project of the ECB and all the Eurozone central banks providing harmonised information on the balance sheets of 62,000 households in 15 Eurozone countries (all except Ireland and Estonia).1
Media hype had been generated by the ranking of the countries’ median household wealth results, especially by the fact that:
Europe's nations and regions
Italy, Germany, Spain, household income, Greece, Eurozone crisis, household wealth
Girls’ education and medieval commerce
Graziella Bertocchi, Monica Bozzano 29 March 2013
To what extent can historical and cultural factors explain the reversal of the gender gap? Using a new comprehensive dataset from Italy, this column explores the long-term determinants of the education gender gap. The evidence suggests that cultural values can persist for centuries, but that there have also been critical evolutionary turning points on the road towards equality.
The reversal of the education gender gap, to the advantage of women, has been part of a quiet revolution that has gradually transformed women’s lives in the vast majority of OECD countries, as documented by Goldin (2006). Even over a broader sample of countries, the 2012 Gender Gap Report compiled by the World Economic Forum shows that 93% of the gap in educational attainment has now been closed. However, the education gender gap is still significant and hard to eradicate in many countries of the world, with the lowest-ranking ones closing only 50% of it.
Economic history Education Gender
Realism, austerity or demagogy? Evidence from Italy
Maurizio Bovi 20 March 2013
How do everyday Italians feel about their economic prospects? How are political reactions related to economic events? This column presents evidence suggesting that Italians are becoming disillusioned. Comparing Berlusconi's and Monti’s resignation, sentiment was more positive after Belusconi's. Rather than a test on Italian citizens’ realism or on their views on austerity, recent political elections should instead be read as a test of voters’ utter disaffection with political institutions.
Before it was contested, there were two interesting – but different – views about the recent political election in Italy. The Economist (2012) had defined the elections as a test of the maturity and realism of Italian voters. The advice was that Italians should vote for Monti. On the other hand, the Paul Krugman in The New York Times (2013) had suggested that the Italian elections could be seen as a test for the impact of failed austerity policies: should Italians not vote for Monti, then failure would be guaranteed.
Europe's nations and regions Politics and economics
Italy, Eurozone crisis