Research

Contributions in Occasional Papers

Approaching the terminal rate and the way forward: a model-based analysis, Bank of Italy Occasional Papers, No. 791, July 2023.

On the Anchoring of Inflation Expectations in the Euro Area, Bank of Italy Occassional Papers, No. 712, September 2022.

Employment and the Conduct of Monetary Policy in the Euro Area, ECB Occasional Paper Series, No. 275, September 2021.

Covid-19 and Economic Analysis: a Review of the Debate, Issue 1, 2, 3 with G. Caracciolo, F. Cingano, V. Ercolani, G. Ferrero, F. Hassan, and P. Tommasino, March-April 2020.

The Natural Rate of Interest, ECB Occasional Paper Series, No. 217, December 2018.

Work in progress

Propagation through the fundamental surplus. Presentation by L. Ljungqvist (Sep. 2022)

An estimated HANK model for the euro area.

Work on hold 

Structural Skill-Biased Technological Change [May 2019].

A new stylized fact of structural change is documented: in a sample of 11 European economies the hourly wage of the services sector relative to the goods sector has constantly decreased over time in the period 1970-2007. Calibrating a two sector model with high and low skilled workers it is shown that the driver of such a structural change is a "skill-biased technical change" which leads the relative skill-intensity in the goods sector to increase over time. This prediction of the model finds support in the data once the workers' type of skill is identified according to the level of educational attainment. The new stylized fact holds also for the United States and is reinforced once industries are classified into tradable and nontradable sectors, while the sectoral skill-bias differences are corroborated by measures of job computerization probability.

Age-Structure and the Real Interest Rate in the US: Model meets Evidence [January 2017].

What is the effect on the real interest rate of a marginal increase in the number of people in each age-group of a demographic distribution? The answer comes for the United States: empirically by estimating the reduced-form effect, theoretically by calibrating a standard closed-economy general-equilibrium overlapping-generation model analysed in a stationary equilibrium. It is found that the model with no insurance against mortality risk mimics certain features found empirically: marginal increases of the number of workers have in the early life-periods a positive effect on the real interest rate; then, approximately since 20 years before retirement, their effect is negative; marginal increases in the number of retirees have a weaker negative effect, the weaker the further to the right of the demographic distribution the marginal increase occurs.  When the model is changed assuming that individuals do not discount their survival probabilities maximizing their consumption utility, the shape of the theoretical effect resembles much closer the empirical one. When the model is used assuming that individuals are perfectly insured against mortality risk ("perfect annuity markets"), the theoretical effect is off the track established empirically. 

The TNT Divide: How Technological Change Biased Toward the Tradable Sector is Shaping Advanced Economies.

The findings in this report derive from the systematic split of industries into either tradable (T) or nontradable (N) sectors in advanced economies. They are meant to lay the basis for a theory that is apt to account for structural change in absence of wage equalization across sectors, possibly for an open economy, or for an empirical work that finds the determinants of the following variables whose positive growth is found to be constant over time (period 1970-2015): (1) relative price of N-goods; (2) relative labor productivity in the T-sector; (3) relative hours worked in the N-sector; (4) final consumption expenditure share on N-goods; (5) relative hourly wage in the T-sector. Using some analytical frameworks it is argued that to account for the growth of these variables one needs to consider how technological change biased toward the T-sector creates displaced workers there in presence of imperfect mobility of labor between sectors. There is evidence that the way this technology operates might account also for the following developments over time: (a) the decrease of the sectoral labor shares of income, especially in the T-sector; (b) the increase of the relative skill intensity of the T-sector.  Finally, by linking the 702 OES occupations with 88 NAICS industries I find that the probability of an occupation being computerized is persistently higher in the T-sector relative to the N-sector since 2003 for the US.

Deciphering the Forward Guidance Puzzle: Imperfect Credibility in a New Keynesian Model (with Jakob Almerud and Magnus Åhl).

We introduce forward guidance through anticipated monetary policy shocks in a simple New-Keynesian model. The agents in the model regard the announced shocks as fully credible, which we find unrealistic. Based on empirical evidence, we introduce a credibility parameter which decreases exponentially with the number of periods into the future the announcement concerns. We show that this dampens the otherwise unreasonably large effects of forward guidance.

Theoretical note; empirical evidence (by Magnus Åhl).

Structural Transformation and Political Preferences (with Nicolò Cavalli).

We find that structural transformation in advanced economies - the process of systematic reallocation of resources from the manufacturing sector to the services sector - goes hand in hand with an increasing propensity to supply labor in nontradable industries. We link this labor supply propensity to the likelihood of finding political support for policies aiming at trade openness and cosmopolitanism. We conclude that there might be structural forces underlying economic development giving fertile ground for a progressive political retrenchment, favoring populist movements. 

Other published work

L'invecchiamento globale e la permanenza di tre tendenze secolari, Rivista di Politica Economica, N. 2-2021, pp. 109-130.

La monnaie fiscale et le soutien de l’Euro(pe). Pour une réforme de l’architecture monétaire européenne. Revue Française de Socio-Économie, 22, 195-204, 2019/1 (with Massimo Amato). https://doi.org/10.3917/rfse.022.0195 

Il debito dell’Europa con se stessa. Analisi e riforma della governance europea di fronte alla crisi (with Luca Fantacci) Costituzionalismo.it, July 2013.

In the newsThe Eurozone crisis has prompted manifold countermeasures that have managed to avoid collapse, but not to generate recovery. In this article we review major actions undertaken, on one hand to contrast the effects of the crisis mostly through expansionary monetary policies, and on the other hand to cure the presumed causes particularly through more rigid fiscal discipline. We then argue that the low effectiveness of such remedies depends on a bad diagnosis, which imputes the crisis to fragile public finances in the so-called peripheral countries, without acknowledging the root of the problem lying in the external imbalances that divide Europe between creditors and debtors. Finally, we propose to endow the ECB (on the basis of the Target2 system) a new financial facility (Target3), modelled on Keynes’s Clearing Union, and to be managed by the ECB, with the task of reabsorbing those imbalances and of financing the real economy.