Publications in peer-reviewed journals

• Risk Pooling, Intermediation Efficiency, and the Business Cycle, with P. Dindo and L. Pelizzon,

 Journal of Economic Dynamics and Control, Volume 144 (2022),104500 - [preprint]

• Capital Risk, Fiscal Policy, and the Distribution of Wealth, with Luca Regis 

       Mathematics and Financial Economics, Volume 18, Issue 1 (2024), 1-33  - [preprint]

• Dynamic Tax Evasion and Growth with Heterogeneous Agents, with Francesco Menoncin

 Journal of Economic Interaction and Coordination, (2024), 1-16

Book chapters and policy papers (peer-reviewed)

• Shadow Economy and Corruption, with Rosella Levaggi and Francesco Menoncin

In New Perspectives in the Public and Cultural Sectors (2025), edited by C. Guccio, I. Mazza, and G. Pignataro, Springer

• Towards a Framework for a New Research Ecosystem, with Roberto Savona, Cristina Maria Alberini, Lucia Alessi, Iacopo Baussano, Petros Dellaportas, Ranieri Guerra, Sean Khozin,  Sergio Pecorelli, Guido Rasi, Paolo Daniele Siviero, and Roger M. Stein

Humanities and Social Sciences Communications (2025)

Working papers

• Coordinating Dividend Taxes and Capital Regulation (2024) with Salvatore Federico and Luca Regis - submitted

In this paper, we examine how dividend taxes (and bans) and capital requirements that vary with the state of the economy influence a bank's optimal capital buffers and shareholder value. In the model, the bank distributes dividends and issues costly equity to maximise shareholder value, while its assets generate stochastic income under time-varying macroeconomic conditions. We solve the bank's stochastic control problem and derive the distribution of its capital buffers in closed form. Imposing dividend taxes (or bans) in bad macroeconomic states generates an intertemporal trade-off, as it encourages capital buffers accumulation in those states but promotes dividend payouts in the good ones. Furthermore, the policy undermines financial stability by reducing the bank's value and weakening its incentives to recapitalise in both good and bad states. Coordinating dividend taxes with counter-cyclical capital requirements can mitigate value losses and ease the trade-off, but it also exacerbates disincentives for recapitalisation.

• Inefficient Bank Recapitalization, Bailout, and Post-Crisis Recoveries (2020)  - under revision

 [last revised: 01.08.2023] - [slides] 

We study bailouts in a macroeconomic model where banks provide services that facilitate firms' investments but limit their leverage to prevent costly recapitalisations. This precautionary motive can generate financial crises, in which banks' limited intermediation capacity discourages investments and dampens growth. Bank recapitalisations are constrained-inefficient because they do not internalise that, in the aggregate, higher equity buffers allow for more intermediation, favouring investments and accelerating recoveries. System-wide bailouts can mitigate this inefficiency and improve long-run welfare as long as their positive effect on banks' equity value outweighs their negative impact on risk-taking incentives.

• Tax Evasion and the Productivity Distribution, with Francesco Menoncin and Luca Regis

Collegio Carlo Alberto Working Paper N. 679 - Slides [04.07.2023]  - R&R@EM (Economic Modelling)

 [last revised: 23.07,2025]

We develop a heterogeneous-firm macroeconomic model to investigate how tax evasion affects the productivity distribution in general equilibrium. In our model, entrepreneurs choose capital and labour to produce with their firms, invest in bonds, and evade taxes to maximise their intertemporal utility, derived from dividends. Their firms face leverage constraints and uninsurable productivity shocks. We find that tax evasion redistributes capital toward low-productivity firms, relaxing their leverage constraints. At the same time, it increases public debt, raising the cost of capital and crowding out firms at the margin. As a result of these forces, we show that (i) the decline in the average productivity of high-productivity firms drives the negative correlation between the size of the shadow economy and aggregate productivity; and (ii) the productivity gains from reducing evasion are smaller in financially underdeveloped economies, where leverage constraints are stricter.

• May Tax Evasion Help Control Public Debt?, with Rosella Levaggi and Francesco Menoncin - submitted

CRC Discussion Paper No. 623

This paper examines the impact of tax evasion on public debt in a dynamic general equilibrium model with incomplete financial markets. In our model, utility-maximising entrepreneurs optimally choose how much to invest in safe government bonds and risky capital production, as well as which percentage of their income to evade. If evasion is audited, a fine must be paid. The government funds non-productive spending through income taxes and debt. Evasion enables entrepreneurs to accumulate more capital, thereby reducing their need to save for unexpected events. In equilibrium, fewer savings mean fewer investments. This lowers economic growth and increases the cost of borrowing for the government, ultimately raising the debt-to-GDP ratio. Nevertheless, when we compare a reduction in the tax burden achieved through a higher tolerance for tax evasion with a reduction in the legal tax, we show that the first strategy leads to a smaller increase in the debt-to-GDP ratio. This is because, unlike tax evasion, legal tax cuts directly increase the return on capital investments, thereby raising the government's borrowing costs in equilibrium.

• The Equilibrium Effects of Mortality Risk, with Giorgio Rizzini and Luca Regis - submitted

In this paper, we investigate how mortality risk affects agents' optimal decisions and asset prices within a general equilibrium framework. In our model, risk-averse households facing a stochastic mortality rate allocate their net worth among consumption, risky capital production, and risk-free bonds to maximise intertemporal utility. In this setting, we show that a negative and time-varying correlation exists between mortality and risky asset prices, even when production and mortality risks are mutually independent. The correlation arises because higher mortality rates reduce the incentive to save for the future, leading to increased current consumption and decreased capital investment. As a result, higher mortality lowers the prices of risky capital and raises the risk-free rate in equilibrium. Calibrated simulations suggest that endogenous price effects account for the largest share of welfare gains and losses following sharp changes in mortality, such as pandemics or rapid increases in longevity.

• Financial Frictions and Non-linear Dynamics in Continuous-time Macro-finance Models (2023)  - R&R 

[last revisited 06.10.2023]

 We provide a technical overview of the modelling foundations and the core mechanisms proposed in the recent macro-finance literature, which introduces financial frictions in the form of restricted market participation and occasionally binding leverage constraints in continuous-time general equilibrium models. This class of models is particularly relevant because it can reproduce, in a very tractable framework, the highly non-linear dynamics that associate variations in financial intermediaries' balance sheets with the manifestation of complex phenomena such as time-varying risk premiums, business cycle fluctuations, and economic instability. To complement the survey, we review useful tools from continuous-time optimal control theory to tackle these models and discuss their advantages relative to their discrete-time counterparts.

Work in progress

• Optimal Dynamic Portfolios Under R&D Investment Risk, with Roberto Savona [first draft coming soon]

• A Monte Carlo Solution Method for Heterogeneous-agent Macro-finance Models with Errikos Melissinos [first draft coming soon]

• Dividend Taxation, Bailouts, and Rollover Crises, with Giorgio Ferrari and Luca Regis [first draft coming soon]

• Modelling the Distribution of Tax Compliance with Tomas Dutra [first draft coming soon]

• Monetary Policy Uncertainty and the Yield Curve with Ivan Gallo and Francesco Menoncin