This paper characterizes the optimal tax and expenditure policies in economies where households’ unobservable gross earnings depend on exogenous (or inherited) capabilities and input investments. In a two-class economy, optimal redistribution relies on non-linear income taxation and input...

In this paper we investigate how tightening fiscal constraints (e.g., through intergovernmental transfer cuts) can lead local governments to postpone investments’ payments. We first provide a simple model showing how local governments can use arrears to relax their short-run financial...

We analyze the optimality of alternative mechanisms of public provision of private goods affecting the productive capacity of households (e.g. education, health-care) rather than directly their welfare. Opting out mechanisms - often considered a tool to focus social expenditure - are proven to...

The relationship between fiscal and financial euro area indicators and sovereign yield spreads has changed after the start of the financial crisis. Increased financial volatility has magnified the impact of fiscal conditions as drivers of sovereign risk, has widened the set of macroeconomic...

This paper estimates Taylor rules featuring instabilities in policy parameters, switches in policy shocks' volatility, and time-varying trend inflation using post-WWII U.S. data. The model embedding the stochastic target performs better in terms of data-fit and identification of the changes in...

Economic research has inquired the role of asymmetric information between central and local governments in shaping the structure of optimal regional grants. In the mainstream literature, the theoretical setting has been characterized by some basic informational asymmetry between central...

The relationship between fiscal and financial euro area indicators and sovereign yield spreads has changed after the start of the financial crisis. Increased financial volatility has magnified the impact of fiscal conditions as drivers of sovereign risk, has widened the set of macroeconomic...

New opportunities and risks arise from the growing role of Italian local governments as public debt issuers on credit and financial markets. The paper analyzes the present institutional framework, and characterizes a reform implementing a stable and efficient "market" for the Italian local...

L’articolo si prefigge di analizzare l’evoluzione, a cavallo degli ultimi anni di crisi, dell’intervento pubblico a supporto del capitale di rischio tramite strumenti innovativi di partnership con operatori privati. L’intervento pubblico origina da fallimenti del mercato del capitale di...