Associate Professor of Economics
University of Padova
CEPR Research Affiliate (MG and POLECON Research Groups)
http://citec.repec.org/p/r/pru160.html
You may download my CV and contact me at:
Department of Economics and Management "Marco Fanno"
via del Santo 33
35100 Padova (Italy)
Phone: +39-3515436907
email: [email protected]
Research Interests: Political Economy, Public Finance, Macroeconomics.
Research Projects:
Working Progress and Working Papers
• Sustainable Social Security (joint with Sergio Cappellini, Francesco Lancia and Tim Worrall) [in progress]
• Households’ Macroeconomic Beliefs: The Role of Education (joint with Jessica Piccolo, Eleonora Granziera, and Efrem Castelnuovo) [pdf]
ABSTRACT: We investigate how education shapes households’ macroeconomic beliefs by surveying Dutch households on their perceptions and forecasts of inflation, unemployment, mortgage rates, and stock prices. Our findings unveil significant differences between highly-educated and less-educated households. Highly educated respondents form beliefs consistent with a monetary policy trade-off between inflation and unemployment, whereas less-educated households adopt a "supply-side" perspective. When exposed to vignette-based scenarios simulating monetary policy shocks, highly educated individuals adjust their beliefs and consumption-saving decisions in line with intertemporal substitution and textbook economic models. In contrast, less-educated respondents often retain pre-existing beliefs or revise them using non-standard mental models. Moreover, highly educated households primarily rely on formal education and newspapers for economic information, while less-educated households are more influenced by social media. These findings point to the need to model education-related heterogeneity and communicate policy targets and decisions in a simplified manner to reach different socio-economic groups.
• The Dynamics of Growth and Debt: A Political Economy Perspective (joint with Sergio Cappellini and Francesco Lancia) [pdf]
ABSTRACT: This paper presents a dynamic political economy theory of fiscal policy to explore the relationship between public debt and economic growth in modern democracies. The driving force of the model is the intergenerational conflict over budget allocation and financing. Successive generations of voters choose fiscal policies through elections, with younger voters favoring productivity-enhancing public investments and older voters prioritizing immediate public consumption. Public spending is financed through income taxation and bond issuance. We characterize the Markov perfect equilibrium of the voting game in a small open economy and find that it results in underinvestment and overborrowing compared to a Ramsey benchmark. Growth-oriented fiscal rules can unintentionally exacerbate overborrowing, restricting public spending and slowing long-term growth. Although a mix of debt-limiting and growth-promoting rules can eliminate distortions in the long run, transitional welfare losses remain. Differences in political parties’ adherence to fiscal rules also lead to endogenous fiscal polarization and fiscal cycles tied to electoral dynamics.
• Bandwagon Effects in International Environmental Agreements (joint with Fabio Miessi Sanches and Jonas Werth) [pdf]
ABSTRACT: This paper develops a dynamic model of environmental treaty formation with heterogeneous countries that allows for entry, exit and country specific uncertainty on the benefits from other countries ratifying the treaty. Using a dataset comprising the cross-section of ratification dates of global environmental treaties for 1980-2020, we structurally estimate the model’s parameters. The estimates inform about the existence of strategic complementarity or substitutability in the formation of environmental treaties, which occur when the relative benefits from cooperation increase or decrease after the inclusion of an additional country. Through counterfactual experiments, we illustrate how mechanisms fostering strategic complementarity can expedite the establishment of a grand coalition in support of environmental treaties and quantify associated welfare gains.
• On the Effectiveness of Gendering Politics (joint with Arcangelo Dimico and Francesco Lancia) [pdf]
ABSTRACT: We examine the effectiveness of gender reforms in increasing women's representation in elected offices. We exploit variations generated at the Italian regional and municipal elections by two forms of gender reforms: i) party-list gender quotas, a supply-side reform intended to influence party decisions regarding candidacy, and ii) double-gender preference systems, a demand-side reform intended to influence voting decisions on candidates. Our findings indicate that party-list gender quotas have no effect on the likelihood of women winning a seat, whereas double-gender preference systems are effective in increasing women's representation. Furthermore, we provide evidence that supply-side reforms are more susceptible to party-list manipulations, which undermine their effectiveness. In constituencies with a stronger voter gender bias, supply-side reforms may also unintentionally have a negative impact on women's representation in leadership positions.
Publications
• Intergenerational Insurance (joint with Francesco Lancia and Tim Worrall) [pdf] accepted at the Journal of Political Economy
CEPR Working Paper DP15440 [link] [WE_ARE Seminar Series] [slides]
ABSTRACT: How should successive generations insure each other when the enforcement of transfers between generations is limited? This paper studies intergenerational insurance when transfers maximize the expected discounted utility of all generations subject to a participation constraint for each generation. If complete insurance is not achievable, the optimal intergenerational insurance is history-dependent even when the environment is stationary. The risk from a generational shock is spread into the future, with periodic resetting. Interpreting intergenerational insurance in terms of public debt, the fiscal reaction function is non-linear and the risk premium on debt is lower than the risk premium with complete insurance.
• Prices vs. Quantities for Self-Enforcing Agreements, the Journal of Environmental Economics and Management, 2022, 111: 102595. (joint with Bård Harstad and Francesco Lancia) [pdf] CEPR Working Paper DP15044 [link]
ABSTRACT: We study the optimal self-enforcing agreement based on quantity mandates and price instruments in a repeated game between countries, whose domestic firms invest in green technology before consumers emit. We find that technology must be regulated in addition to emissions, even in the absence of technological spillovers. Under a quantity agreement, emission is capped and countries must either overinvest in technology—to weaken the temptation to emit—or they must be punished unless they invest less—to maintain their willingness to retaliate on others. Under a price agreement, emission is taxed and investments subsidized. The price agreement dominates the quantity agreement because when firms are free to modify investment levels if another government defects, the punishment for defection is stronger
• Youth Enfranchisement, Political Responsiveness, and Education Investments: Evidence from the US, the American Economic Journal: Economic Policy, 2020, 12(3): 76–106. (joint with Graziella Bertocchi, Arcangelo Dimico, and Francesco Lancia), [link], [pdf] CEPR Working Paper DP12332 [link] Coverage: AEA Research Highlights "Boosting the Youth Vote" [link]; Voxeu.org "The Fiscal Impact of Empowering the Voters of Tomorrow" [link]; Nytimes "When Youth Voter Turnout Rises, So Does State Government Spending on Education" [link]; BI Business Review "Stop Disenfranchising Young Voters" [link]
ABSTRACT: We examine the link between the political participation of the young and fiscal policies in the U.S. We generate exogenous variation in participation using the passage of preregistration laws, which allow the young to register before being eligible to vote. After documenting that preregistration promotes youth enfranchisement, we show that preregistration shifts state government spending toward higher education, the type of spending for which the young have the strongest preference. A 1% increase in youth voter turnout generates a 0.77% increase in higher education spending. The results collectively suggest political responsiveness to the needs of the newly enfranchised constituency.
• Compliance Technology and Self-Enforcing Agreements, the Journal of the European Economic Association, 2019, 17(1): 1–29. Lead article, (joint with Bård Harstad and Francesco Lancia), [pdf] Coverage: Dagens Næringsliv [link]
ABSTRACT: This paper analyzes a game in which countries repeatedly make emission and technology investment decisions. We derive the best equilibrium, that is, the Pareto-optimal subgame-perfect equilibrium, when countries are insufficiently patient for folk theorems to be relevant. Relative to the first best, the best equilibrium requires countries to overinvest in technologies that are green, that is, strategic substitutes for polluting, but to underinvest in adaptation and brown technologies, that is, strategic complements to polluting. Technological transfers and spillovers might discourage investments but can be necessary to motivate compliance with emissions when countries are heterogeneous.
• Sustaining Cooperation through Strategic Self-Interested Actions, the B.E. Journal of Theoretical Economics, 2019, 19(2): 1–11. Lead article, (joint with Francesco Lancia), [pdf]
ABSTRACT: This paper studies how organizations seek to promote cooperation between their members when individual contributions to an organization’s output are imperfectly observable. It considers an overlapping-generations game in which members with conflicting interests expend effort in pursuing activities outside the organization, in addition to the effort they devote to increasing the organization’s output. We show that cooperation is easier to enforce when organizations link rewards and punishments to effort in outside activities. In the best public perfect equilibrium, effort in outside activities is distorted in order to signal a member’s willingness to cooperate inside the organization.
• Public Education and Pensions in Democracy: A Political Economy Theory, the Journal of the European Economic Association, 2016, 14(5), 1038-1073, (joint with Francesco Lancia) [pdf] Working paper [pdf], Technical Appendix [pdf] Coverage: NEP-DGE Blog [pdf]
ABSTRACT: A dynamic political economy theory of fiscal policy is presented to explain the simultaneous existence of public education and pensions in modern democracies. The driving force of the model is the intergenerational conflict over the allocation of the public budget. Successive generations of voters choose fiscal policies through repeated elections. The political power of elderly voters creates the motive for adults to support public investment in the human capital of future generations since it expands future pension possibilities. We characterize the Markov perfect equilibrium of the voting game in a small open economy. The equilibrium reproduces salient features of intergenerational fiscal policies in modern economies.
University of Padova
CEPR Research Affiliate (MG and POLECON Research Groups)
http://citec.repec.org/p/r/pru160.html
You may download my CV and contact me at:
Department of Economics and Management "Marco Fanno"
via del Santo 33
35100 Padova (Italy)
Phone: +39-3515436907
email: [email protected]
Research Interests: Political Economy, Public Finance, Macroeconomics.
Research Projects:
- SELECT - Sustainable Legacy Debt (PI, financed by MUR-PRIN 2023-2025)
- CHANGE - Challanges in the National Governance of the Environment (financed by MUR-PRIN 2023-2025)
- GENESIS - Generationally Sustainable Institutions (PI, financed by STARS-Unipd 2022-2024)
Working Progress and Working Papers
• Sustainable Social Security (joint with Sergio Cappellini, Francesco Lancia and Tim Worrall) [in progress]
• Households’ Macroeconomic Beliefs: The Role of Education (joint with Jessica Piccolo, Eleonora Granziera, and Efrem Castelnuovo) [pdf]
ABSTRACT: We investigate how education shapes households’ macroeconomic beliefs by surveying Dutch households on their perceptions and forecasts of inflation, unemployment, mortgage rates, and stock prices. Our findings unveil significant differences between highly-educated and less-educated households. Highly educated respondents form beliefs consistent with a monetary policy trade-off between inflation and unemployment, whereas less-educated households adopt a "supply-side" perspective. When exposed to vignette-based scenarios simulating monetary policy shocks, highly educated individuals adjust their beliefs and consumption-saving decisions in line with intertemporal substitution and textbook economic models. In contrast, less-educated respondents often retain pre-existing beliefs or revise them using non-standard mental models. Moreover, highly educated households primarily rely on formal education and newspapers for economic information, while less-educated households are more influenced by social media. These findings point to the need to model education-related heterogeneity and communicate policy targets and decisions in a simplified manner to reach different socio-economic groups.
• The Dynamics of Growth and Debt: A Political Economy Perspective (joint with Sergio Cappellini and Francesco Lancia) [pdf]
ABSTRACT: This paper presents a dynamic political economy theory of fiscal policy to explore the relationship between public debt and economic growth in modern democracies. The driving force of the model is the intergenerational conflict over budget allocation and financing. Successive generations of voters choose fiscal policies through elections, with younger voters favoring productivity-enhancing public investments and older voters prioritizing immediate public consumption. Public spending is financed through income taxation and bond issuance. We characterize the Markov perfect equilibrium of the voting game in a small open economy and find that it results in underinvestment and overborrowing compared to a Ramsey benchmark. Growth-oriented fiscal rules can unintentionally exacerbate overborrowing, restricting public spending and slowing long-term growth. Although a mix of debt-limiting and growth-promoting rules can eliminate distortions in the long run, transitional welfare losses remain. Differences in political parties’ adherence to fiscal rules also lead to endogenous fiscal polarization and fiscal cycles tied to electoral dynamics.
• Bandwagon Effects in International Environmental Agreements (joint with Fabio Miessi Sanches and Jonas Werth) [pdf]
ABSTRACT: This paper develops a dynamic model of environmental treaty formation with heterogeneous countries that allows for entry, exit and country specific uncertainty on the benefits from other countries ratifying the treaty. Using a dataset comprising the cross-section of ratification dates of global environmental treaties for 1980-2020, we structurally estimate the model’s parameters. The estimates inform about the existence of strategic complementarity or substitutability in the formation of environmental treaties, which occur when the relative benefits from cooperation increase or decrease after the inclusion of an additional country. Through counterfactual experiments, we illustrate how mechanisms fostering strategic complementarity can expedite the establishment of a grand coalition in support of environmental treaties and quantify associated welfare gains.
• On the Effectiveness of Gendering Politics (joint with Arcangelo Dimico and Francesco Lancia) [pdf]
ABSTRACT: We examine the effectiveness of gender reforms in increasing women's representation in elected offices. We exploit variations generated at the Italian regional and municipal elections by two forms of gender reforms: i) party-list gender quotas, a supply-side reform intended to influence party decisions regarding candidacy, and ii) double-gender preference systems, a demand-side reform intended to influence voting decisions on candidates. Our findings indicate that party-list gender quotas have no effect on the likelihood of women winning a seat, whereas double-gender preference systems are effective in increasing women's representation. Furthermore, we provide evidence that supply-side reforms are more susceptible to party-list manipulations, which undermine their effectiveness. In constituencies with a stronger voter gender bias, supply-side reforms may also unintentionally have a negative impact on women's representation in leadership positions.
Publications
• Intergenerational Insurance (joint with Francesco Lancia and Tim Worrall) [pdf] accepted at the Journal of Political Economy
CEPR Working Paper DP15440 [link] [WE_ARE Seminar Series] [slides]
ABSTRACT: How should successive generations insure each other when the enforcement of transfers between generations is limited? This paper studies intergenerational insurance when transfers maximize the expected discounted utility of all generations subject to a participation constraint for each generation. If complete insurance is not achievable, the optimal intergenerational insurance is history-dependent even when the environment is stationary. The risk from a generational shock is spread into the future, with periodic resetting. Interpreting intergenerational insurance in terms of public debt, the fiscal reaction function is non-linear and the risk premium on debt is lower than the risk premium with complete insurance.
• Prices vs. Quantities for Self-Enforcing Agreements, the Journal of Environmental Economics and Management, 2022, 111: 102595. (joint with Bård Harstad and Francesco Lancia) [pdf] CEPR Working Paper DP15044 [link]
ABSTRACT: We study the optimal self-enforcing agreement based on quantity mandates and price instruments in a repeated game between countries, whose domestic firms invest in green technology before consumers emit. We find that technology must be regulated in addition to emissions, even in the absence of technological spillovers. Under a quantity agreement, emission is capped and countries must either overinvest in technology—to weaken the temptation to emit—or they must be punished unless they invest less—to maintain their willingness to retaliate on others. Under a price agreement, emission is taxed and investments subsidized. The price agreement dominates the quantity agreement because when firms are free to modify investment levels if another government defects, the punishment for defection is stronger
• Youth Enfranchisement, Political Responsiveness, and Education Investments: Evidence from the US, the American Economic Journal: Economic Policy, 2020, 12(3): 76–106. (joint with Graziella Bertocchi, Arcangelo Dimico, and Francesco Lancia), [link], [pdf] CEPR Working Paper DP12332 [link] Coverage: AEA Research Highlights "Boosting the Youth Vote" [link]; Voxeu.org "The Fiscal Impact of Empowering the Voters of Tomorrow" [link]; Nytimes "When Youth Voter Turnout Rises, So Does State Government Spending on Education" [link]; BI Business Review "Stop Disenfranchising Young Voters" [link]
ABSTRACT: We examine the link between the political participation of the young and fiscal policies in the U.S. We generate exogenous variation in participation using the passage of preregistration laws, which allow the young to register before being eligible to vote. After documenting that preregistration promotes youth enfranchisement, we show that preregistration shifts state government spending toward higher education, the type of spending for which the young have the strongest preference. A 1% increase in youth voter turnout generates a 0.77% increase in higher education spending. The results collectively suggest political responsiveness to the needs of the newly enfranchised constituency.
• Compliance Technology and Self-Enforcing Agreements, the Journal of the European Economic Association, 2019, 17(1): 1–29. Lead article, (joint with Bård Harstad and Francesco Lancia), [pdf] Coverage: Dagens Næringsliv [link]
ABSTRACT: This paper analyzes a game in which countries repeatedly make emission and technology investment decisions. We derive the best equilibrium, that is, the Pareto-optimal subgame-perfect equilibrium, when countries are insufficiently patient for folk theorems to be relevant. Relative to the first best, the best equilibrium requires countries to overinvest in technologies that are green, that is, strategic substitutes for polluting, but to underinvest in adaptation and brown technologies, that is, strategic complements to polluting. Technological transfers and spillovers might discourage investments but can be necessary to motivate compliance with emissions when countries are heterogeneous.
• Sustaining Cooperation through Strategic Self-Interested Actions, the B.E. Journal of Theoretical Economics, 2019, 19(2): 1–11. Lead article, (joint with Francesco Lancia), [pdf]
ABSTRACT: This paper studies how organizations seek to promote cooperation between their members when individual contributions to an organization’s output are imperfectly observable. It considers an overlapping-generations game in which members with conflicting interests expend effort in pursuing activities outside the organization, in addition to the effort they devote to increasing the organization’s output. We show that cooperation is easier to enforce when organizations link rewards and punishments to effort in outside activities. In the best public perfect equilibrium, effort in outside activities is distorted in order to signal a member’s willingness to cooperate inside the organization.
• Public Education and Pensions in Democracy: A Political Economy Theory, the Journal of the European Economic Association, 2016, 14(5), 1038-1073, (joint with Francesco Lancia) [pdf] Working paper [pdf], Technical Appendix [pdf] Coverage: NEP-DGE Blog [pdf]
ABSTRACT: A dynamic political economy theory of fiscal policy is presented to explain the simultaneous existence of public education and pensions in modern democracies. The driving force of the model is the intergenerational conflict over the allocation of the public budget. Successive generations of voters choose fiscal policies through repeated elections. The political power of elderly voters creates the motive for adults to support public investment in the human capital of future generations since it expands future pension possibilities. We characterize the Markov perfect equilibrium of the voting game in a small open economy. The equilibrium reproduces salient features of intergenerational fiscal policies in modern economies.
