Research

Job market paper

5-year yield spread with German government bonds

A European Safe Asset? Not Without the Investors (with Juri Marcucci)

We study bonds issued by the European Union (EU) as joint and several liabilities of its member countries and show that they pay higher interest rates than comparably safe and large sovereign issuers. The spread reflects their greater sensitivity to adverse market shocks, which becomes particularly pronounced during periods of monetary tightening. Using novel data, we document that EU bonds have a small investor base because they are excluded from major fixed-income indices due to their lack of formal sovereign status. This exclusion lowers expected prices during crises, making EU bonds unattractive to investors with liquidity needs, such as mutual funds and foreign central banks. Expectations of state-contingent purchases by the European Central Bank (ECB) can substantially compress this premium even when not directed at EU bonds. A demand-based asset pricing framework suggests that the spread would be negligible if the EU were recognized as a fully sovereign issuer and a new safe asset would arise.

Working papers

Fiscal integration with joint debt issuance and taxation

Fiscal integration as a Pareto improvement

I study the effect of partial fiscal integration for sovereign countries that are members of a single currency area. I make three contributions to the existing literature. First, in addition to joint issuance of debt securities, I consider an element of (partial) joint taxation that is costly to default on and hence provides an implicit commitment device for weaker countries. Second, I focus on the welfare gains for stronger countries thanks to the reduced moral hazard due to the costs imposed on them by default of a weak country. Finally, I incorporate the empirical evidence from Bonfanti (2024) to take into account the high cost of issuance of securities that are not formally government bonds.

Network of IP agreements among US corporations

The market for intellectual capital (with Bruno Pellegrino)

We use a novel data source to characterize the market for intellectual property among large US corporations through the licensing of proprietary technology and trademarks. We recover the network of agreements and show that it is a large market with potential for spillovers from one pair of companies to other entities that are related as customers, suppliers, or competitors. We model the strategic choice of firms to license part of their IP to another firm when taking into consideration the interaction of increased productivity with the network structure of the product market. Since firms do not internalize the positive spillovers from technology transfers, there is scope for policy to subsidize the search process. We show that the predictions from the model are clearly detectable in the data, with the pattern of agreements being consistent with firms making a strategic choice when transferring proprietary technology and trademarks.

Other Publications

Do financial markets consider European common debt a safe asset? (with Luis Garicano)

Bruegel blog, December 2022

Policy events

"Workshop on EU borrowing costs: drivers and dynamics", European Parliament, Brussels

Here are the details of the event, my slides and a recording of my testimony

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