Financial innovation has increased opportunities for diversification and lowered investment costs, but has not reduced the relative cost of active (informed) investment strategies compared with passive (less informed) strategies. What are the consequences? I have studied an economy with linear...

This paper shows how credit quality transition matrices of loans to Italian firms changed during a cyclical downturn (2008-09), compared with a previous time of growth (2006-07). Once transition matrices were linked to interest rates, banks appear to have been remarkably able at calibrating...

When do financial markets help in predicting economic activity? With incomplete markets, the link between financial and real economy is state-dependent and financial indicators may turn out to be useful particularly in forecasting "tail" macroeconomic events. We examine this conjecture by...

In this paper we investigate the main features of the Italian financial cycle, extracted by means of a structural trend-cycle decomposition of the credit-to-GDP ratio, using annual observations from 1861 to 2011. In order to draw conclusions based on solid historical data, we provide a thorough...

The paper compares income inequality of households and individuals. Obviously, the latter is greater than the former; in fact households operate a broad redistribution of resources both between earners and non earners (children, unemployed, housewives), and between earners of unequal income....

Greater social cohesion is an explicit goal of the European Union. Progress is monitored considering the performance in each member country on the basis of national indicators; EU-wide estimates of inequality and poverty play no role. Yet this is a basic information to evaluate the progress of...

The paper describes the sample surveys on the personal distribution of incomes conducted in post-war Italy: the first survey carried out by Istituto Doxa in 1947-48; the sample survey of household income and wealth conducted by the Bank of Italy since the late 1960s; the expenditure survey, and...

The financial crisis that began in 2007 has revealed a need for a new supervisory and regulatory approach aimed at strengthening the system and containing the risk of future financial and economic disruptions. Three ingredients are needed to ensure financial stability: robust analysis, better...

Contingent capital � any debt instrument that converts into equity when a predefined event occurs � has received increasing attention as a viable tool for allowing banks to raise capital when needed at relatively more affordable prices than common equity. While the debate has focused...