Research

Fiscal integration as a Pareto improvement

Fiscal integration in a currency union is generally understood as a transfer from fiscally strong to fiscally weak member states. I show that the right institutional design eliminates the trade-off by combining common debt issuance with partial common taxation that members cannot default on. I characterise a fiscal threshold for the common taxation parameter above which fiscal integration eliminates the incentive for the risky country to default, and I derive analytical welfare decompositions for each country. The risky country gains through interest-rate savings on common debt and an equilibrium commitment channel on the residual; the safe country gains through reduced spillovers from default. They both benefit from an implicit risk-sharing instrument given imperfectly correlated business cycles and a calibration suggests that this effect is important. Extensions to convenience yields, the role of the common debt as a reserve asset, and potential reversal in the status of countries enlarge the region of Pareto improvements.

Awards: ECB Lamfalussy Research Fellowship (2024).

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.