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Infrastructures, Public Accounts and Public-Private Partnerships: Evidence from the Italian Local Administrations
Full text linkPublic-Private Partnerships (PPPs) have been widely advocated as flexible contractual solutions enabling the public sector to profit from private firms� innovative solutions for providing additional (possibly by increasing the infrastructural stock) and more valuable public services. Recently, however, practitioners and academics alike have cast doubts on a possible opportunistic use of PPPs: instead of an efficient option to fill infrastructural gaps across different social and economic areas, PPPs may be employed as a privileged way to face periods of fiscal consolidation or those on a tight budget. In order to shed some light on this suspicion, we construct an original dataset containing PPPs� tender notice information, budget results of the Italian Municipalities aggregated at provincial level, per capita wealth, indexes of infrastructural stocks and morpho-demographic information on local areas. Our findings highlights i) a feeble linkage between the decision to deploy a PPP and the existence of an infrastructural gap, and ii) a strong relationship between the number of deployed PPP procedures and the local budgetary results
International Outsourcing and Productivity Growth
Full text linkThis study investigates the impact of international outsourcing to low and high income countries on total factor productivity (TFP) growth based on manufacturing industry data for 14�OECD countries for the period 1995-2000. We find that both the broad and narrow measure of international outsourcing of material inputs to low income countries are not significantly related to total factor productivity growth. In contrast, there is significant impact of purchased services from abroad on TFP growth. In particular, purchased services from abroad account for 20�percent of total factor productivity growth in the manufacturing sector in the selected OECD countries
Aid, Exports, and Growth: a Time-Series Perspective on the Dutch Disease Hypothesis
Full text linkThe available evidence on the effects of aid on growth is notoriously mixed. We use a novel empirical methodology, a heterogeneous panel vector-autoregression model identified through factor analysis, to study the dynamic response of exports, imports, and per capita GDP growth to a �global� aid shock (the common component of individual country aid-to-GDP ratios). We find that the estimated cumulative responses of exports and per capita GDP growth to a global aid shock are strongly positively correlated, and both responses are inversely related to exchange rate overvaluation measures. We interpret this evidence as consistent with the Dutch disease hypothesis. However, we also find that, in countries with less overvalued real exchange rates, exports and per capita GDP growth respond positively to a global aid shock. This evidence suggests that preventing exchange rate overvaluations may allow aid-receiving countries to avoid the Dutch disease
The Role of Labor-Market Changes in the Slowdown of European Productivity Growth
Full text linkThis paper is about the role of policy, institutions, and culture in creating a strong negative tradeoff between productivity and employment growth across groups of countries within Europe. Throughout the postwar era until 1995 labor productivity grew faster in Europe than in the United States. In the decade after 1995, productivity growth in the EU-15 slowed while that in the US accelerated. Europe�s productivity growth slowdown was largely offset by faster growth than the US in employment per capita, leaving little difference in growth of output per capita between the EU and US going back to 1980. We document the productivity-employment tradeoff in the raw data, in regressions that control for the two-way causation between productivity and employment growth, and we show that there is a robust negative correlation between productivity and employment growth across countries and time. We find that the negative effect of changes in employment per capita on changes in productivity is robust to alternative instruments and to the inclusion or exclusion of particular countries like Italy or Spain. We conclude by suggesting that evaluations of alternative policy reforms in Europe should take into account any offsetting effects on employment and productivity by examining the ultimate impact on changes in income per capita
Sudden Stops in the Euro Area
Full text linkThe single currency was expected to make national balance of payments irrelevant for euro-area members. From 2010 onwards, however, governments, but also banks and non-financial companies in several euro-area countries have had difficulty getting access to non-resident financing. Assessing whether there has been a balance-of-payment crisis by looking at the current-account developments is a flawed approach in the case of countries that receive significant official support through assistance programmes or the Eurosystem of central banks. In this paper we document the evolution of private capital flows and formally test for the existence of �sudden stops�. We find that Greece, Ireland, Italy, Portugal and Spain experienced significant private-capital inflows from 2002 to 2007-09, followed by unambiguously massive outflows that qualify as �sudden stops�. The timeline suggests contagion effects were present. We document the substitution of the private capital flows by public flows. In particular, we show that (weak) banks in distressed countries took up a major share of central bank refinancing, thereby contributing to the build-up of intra-Eurosystem net balances. The evidence that the euro area has been subject to internal balance-of-payment crises should be taken as a strong signal of weakness and as an invitation to systemic reform.
Labour Market Imperfections, "Divine Coincidence" and Volatility of Employment and Inflation
Full text linkThe dynamic general equilibrium model with hiring costs presented in this paper delivers involuntary unemployment in the steady state as well as involuntary fluctuations in unemployment. The existence of hiring frictions introduces externalities that, in turn, entail the breakdown of the �divine coincidence� without assuming real wage rigidity. We are able to show that our model with labour market imperfections outperforms the standard New Keynesian model as for the persistence of responses to monetary shocks. We also attempt an analysis of the volatility of two economies, differing in their �degrees of imperfection�. It turns out that �rigid� economies exhibit less unemployment volatility and more inflation volatility than �flexible� economies
Aggregate Earnings and Macroeconomic Shocks: the Role of Labour Market Policies and Institutions
Full text linkI examine the effect of labour market policies and institutions on the transmission of macroeconomic shocks to the labour market, using both aggregate and industry-level annual data for 23 OECD countries, 23 business-sector industries and up to 29 years. I find that high and progressive labour taxes and generous unemployment benefits amplify labour income fluctuations. By contrast, statutory minimum wages reduce the difference in the sensitivity of wages to aggregate shocks between low-wage and high-wage industries. Dismissal regulations are found to mitigate the impact of shocks on both earnings and employment. Moreover, this mitigation effect is greater in industries where firms have a greater propensity to make staffing changes through dismissals
Mobile Phones, Financial Inclusion, and Growth
Full text linkThis paper assesses the impact of mobile phone rollout on economic growth in a sample of African countries from 1988 to 2007. Further, in light of the large financial infrastructure gap in African countries, we investigate whether mobile phone development fosters economic growth through better financial inclusion. In estimating the impact of mobile phone development on growth, we use mobile penetration rate as well as the cost of mobile local calls to capture mobile phone diffusion, while financial inclusion is measured by the number of deposits or loans per head. Using the System Generalized Method of Moments (GMM) estimator to address endogeneity issues, the results confirm that mobile phone development contributes significantly to economic growth in African countries. Part of the positive effect of mobile phone penetration on growth comes from greater financial inclusion
Economic Integration, Inequality and Growth: Latin America Versus the European Economies in Transition
Full text linkThe paper first summarizes the theoretical and empirical literature on the growth and income inequality impact of the liberalization of trade, FDI, portfolio flows, and migration over 1980-2000. It then compares the inequality and growth performance recorded in Latin America over 2000-2008 with that recorded in the fast liberalizing European economies in transition during the same period. The paper argues that the latter region recorded growth rates of GDP broadly slightly higher than those of Latin America, but experienced greater growth instability and a rise in income inequality. The paper suggests that such divergent performance is explained by differences in policie
Does Trade Foster Institutions?
Full text linkThe field of institutional economics stresses the role of institutions as a possibledeterminant of many economic phenomena (see among many othersNorth, 1990). On the other hand, recent contributions suggest that economicfeatures may determine the development of a country’s institutional setting(Acemoglu and Robinson, 2006). Therefore, the issue of the endogeneity ofinstitutions is well known and widely debated whenever a causal relationshipbetween economic variables and institutions is suggested..