Jochen Andritzky, Lars Feld, Christoph Schmidt, Isabel Schnabel, Volker Wieland, 21 July 2016

To make the no-bailout clause credible and to enhance the effectiveness of crisis assistance, private creditors should contribute to crisis resolution in the Eurozone. This column proposes a mechanism to allow for orderly restructuring of sovereign debt as part of ESM programmes. If debt exceeds certain thresholds, the mechanism triggers an immediate maturity extension. In a second stage, a deeper debt restructuring could follow, depending on the solvency of a country. The mechanism could be easily implemented by amending ESM guidelines. 

Yakov Amihud, Carlo Favero, 19 July 2016

The public debate over how to resolve the problem of Italian banks centres on whether there should be a government bailout, or whether banks’ bondholders should bear the burden. Absent from the discussion is what will happen to the banks’ stockholders, who should theoretically be wiped out before bondholders are asked to undergo a haircut. This column addresses the problem of who will manage the banks if stockholders quit. The Italian government should require banks to issue deep discount rights, which is a coercive way to raise equity and thus strengthen the banks’ balance sheet and their solvency.

Giudici Paolo, Laura Paris, 30 June 2016

In April 2016, Italian banks set up an equity fund intended to recapitalise troubled financial institutions in a ‘private bail-out intervention’ scenario, with a view to avoiding a bail-in under the European Bank and Recovery Resolution directive. This column analyses the main differences between a bail-in and a bail-out scenario. In particular, it compares contagion effects, and thus the total default probabilities of financial institutions in these two circumstances, in order to establish which banks would benefit more from a bail-out rather than a bail-in.

Sara Calligaris, Massimo Del Gatto, Fadi Hassan, Gianmarco Ottaviano, Fabiano Schivardi, 28 June 2016

Many advanced economies have experienced a productivity slowdown in recent years. Italy, however, has been experiencing such a slowdown since the mid-1990s. This column provides a detailed analysis of Italy’s patterns of misallocation over this period. Firms in the Northern regions, as well as large firms, have experienced the sharpest increase in resource misallocation. To tackle the resulting productivity slowdown, reforms need to address unemployment benefits and higher education, as well as encouraging investment in intangible assets. 

Federico Cingano, Francesco Manaresi, Enrico Sette, 24 June 2016

Negative shocks to bank balance sheets are problematic not just for financial markets, but for employment and economic growth more widely. This column uses evidence on a bank liquidity shock in Italy in 2007-10 to show the impact on firms’ production, investment, and employment. Firms borrowing from banks with a high exposure to the shock experienced a more intense fall both in credit flows and in investment expenditure. While the credit cut has been homogeneous across borrowers, firms with easier access to external finance were able to contain the negative consequences of the drop in credit for investment.

Guglielmo Barone, Sauro Mocetti, 17 May 2016

Societies characterised by a high transmission of socioeconomic status across generations are not only more likely to be perceived as ‘unfair’, they may also be less efficient as they waste the skills of those coming from disadvantaged backgrounds. Existing evidence suggests that the related earnings advantages disappear after several generations. This column challenges this view by comparing tax records for family dynasties (identified by surname) in Florence, Italy in 1427 and 2011. The top earners among the current taxpayers were found to have already been at the top of the socioeconomic ladder six centuries ago. This persistence is identified despite the huge political, demographic, and economic upheavals that occurred between the two dates. 

Luca Fumarco, Giambattista Rossi, 23 April 2016

A vast cross-discipline literature provides evidence that — in both education and sports — the youngest children in their age group are usually at a disadvantage because of within-group-age maturity differences, known as the ‘relative age effect’. This column asks whether this effect could last into adulthood. Looking at Italian professional footballers’ wages, the evidence suggests that the relative age effect is inescapable.

Guglielmo Barone, Alessio D'Ignazio, Guido de Blasio, Paolo Naticchioni, 19 April 2016

The recent refugee crisis in Europe has highlighted that increased immigration leads to political success for extreme right-wing parties. This column uses evidence from three elections in Italy to quantify the impact immigration has on the political success of non-extreme right-wing parties. In the Italian case, immigration leads to bigger gains for centre-right parties than extreme right parties.

Luigi Guiso, Luigi Pistaferri, Fabiano Schivardi, 03 April 2016

Entrepreneurship often concentrates in certain geographic locations, with Silicon Valley the most famous example today. While a large literature focuses on these cross-location differences in entrepreneurial density, questions remain about the supply of entrepreneurial skills across locations. Using Italian data, this column investigates whether selection into entrepreneurship is affected by learning opportunities in adolescence. Those who grow up in an area with higher entrepreneurial density are found to be more likely to become entrepreneurs themselves. They are also more likely to succeed and earn a higher income.

Stefano Micossi, 26 February 2016

A combination of shocks has led to the spectre of a renewed systemic bank crisis within the EU. This column argues that what is needed is a regulatory policy response in the form of joint action by European governments to convince financial investors that bank liabilities are secure.

Jacob Kirkegaard, 25 January 2016

The migrant crisis will continue to top headlines in 2016. This column takes a detailed look at the EU’s response to dealing with migration, concluding that everything points towards failure as the likely outcome. Unlike the most critical aspects of the Eurozone Crisis, the main drivers of the current migration emergency are external factors such as war. These circumstances are highly unlikely to change in the medium term. The hardball politics and threats that proved extraordinarily effective in coercing member states into accepting domestic political conditionality in return for financial aid during the Eurozone Crisis are doomed to fail when it comes to migration.

Biagio Bossone, Marco Cattaneo, 04 January 2016

‘Helicopter tax credits’ have been proposed as a means of injecting new purchasing power into the economies of Eurozone Crisis countries. This column outlines one such system for Italy. The Tax Credit Certificate system is projected to accelerate Italy’s recovery over the next four years, and will likely be sustainable. It also provides a tool to avoid the breakup of the Eurosystem and its potentially disruptive consequences.

Dino Pinelli, István Székely, Janos Varga, 22 December 2015

Italy’s economic performance is lagging behind other Eurozone and OECD countries. This column argues that radical changes in human capital, financial, innovation and product markets, and taxation would restore growth, but will take time to bear fruits. This leaves no room for complacency in the ongoing reform efforts. 

Tito Boeri, Marta De Philippis, Eleonora Patacchini , Michele Pellizzari, 24 November 2015

How a host country can best assimilate immigrants is understandably on the minds of West European governments. This column presents new evidence that immigrants in Italy who live in neighbourhoods with a large share of non-Italians are significantly less likely to be in employment than their counterparts in less segregated areas. Furthermore, the negative effect of a large migrant share on employment is magnified by the presence of illegal immigrants in the neighbourhood. This suggests that keeping a large share of illegal immigrants in a country may exert negative externalities on those migrants who have legal status.

Raffaela Giordano, Sergi Lanau, Pietro Tommasino, Petia Topalova, 04 August 2015

Italy’s productivity has been stagnant since the late 1990s. This column argues that public sector inefficiency could be partially responsible for the country’s low labour productivity. The evidence suggests that Italy could realise significant macroeconomic productivity gains if average public sector efficiency were to improve from its current faltering levels.

Tito Boeri, Pietro Garibaldi, Espen Moen, 12 June 2015

A new labour law in Italy aims to protect dismissed employees and offer firms greater incentives for human capital investment. This column explains the significance of the change, what it means for firms in Italy and its potentially positive effect on post-crisis job-creation.

Tito Boeri, Pietro Garibaldi, Espen Moen, 12 June 2015

A new labour law in Italy aims to protect dismissed employees and offer firms greater incentives for human capital investment. This column explains the significance of the change, what it means for firms in Italy and its potentially positive effect on post-crisis job-creation. 

Alberto Alesina, Matteo Paradisi, 29 May 2015

Most of us intuitively believe that politicians reduce taxes and increase spending in the run up to elections to curry favour with voters. But our logic may well be flawed. This column presents evidence from recent Italian elections suggesting that things aren’t so black and white. Yes, some municipalities set lower tax rates in the run up to elections. But the evidence also suggests that municipalities running deficits will think twice about tax breaks and spending sprees. Politicians in big cities are also more cautious, choosing to focus not on tax but on more pressing local issues.

Luca Flabbi, Mario Macis, Andrea Moro, Fabiano Schivardi, 24 April 2015

Despite the convergence between men and women in many labour market indicators, women are still vastly underrepresented at the boardroom level. Using Italian data, this column presents new evidence on the impact of having a female CEO on the distribution of wages for male and female workers within firms. Female CEOs are shown to reduce the gender wage gap at the top of the wage distribution but widen it at the bottom. The authors also show that firms with female CEOs perform better, the higher the fraction of women in the firm’s workforce.

Nadege Jassaud, 30 October 2014

Sound corporate governance is essential for a well-functioning banking system and the integrity of financial markets. This column discusses the corporate governance of Italian banks, its regulatory framework, and the specific challenges arising from the role played by foundations and large cooperatives. Although Italian banks have recently made progress in improving their corporate governance, more needs to be done.

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