Marco Albori

My research interests include the effects of policy and macroeconomic shocks on international capital flows, as well as monetary policy and finance. I explore these themes from an empirical standpoint.

Politics will tear us apart, again.

Geopolitical risk, fragmentation, and capital flows

Draft

This review summarizes empirical research on the impact of geopolitical risk and financial fragmentation on cross-border capital flows. It distinguishes between event-driven geopolitical risk and structural political divides, showing that both influence international investment through retrenchment and alignment-based reallocation. Using gravity models, the literature documents a growing role of political distance in shaping foreign direct investment and portfolio flows, particularly in emerging markets, strategic sectors, and in the euro area since the invasion of Ukraine. Open questions include the macroeconomic consequences of financial fragmentation, its impact on the global financial cycle, and implications for the role of reserve currencies.

US election risks and the impact of Trump’s re-election odds on financial markets

with Alessandro Moro and Valerio Nispi Landi

Draft and VoxEu 16/07/2024

We estimate a structural vector auto-regression (SVAR) model to gauge the economic implications of changes in US elections odds through the lens of financial markets. We find that a higher likelihood of Trump’s election i) increases the volatility in the US bond market; ii) it decreases equity market volatility and boosts stock prices; iii) it reduces the oil price. These results suggest that financial markets expect a Trump’s administration to be relatively more market-oriented than Biden’s, less focused on environmental concerns and on the sustainability of public debt.

The gravity of Offshore Financial Centers: Estimating real FDIs using a binary choice model

with Alessio Anzuini, Fabrizio Ferriani and Luca Rossi

International Economics, 2024

Questioni di Economia e Finanza (Bank of Italy Occasional Papers) N. 805, 2023

Fiscal and regulatory arbitrage opportunities in Offshore Financial Centers (OFCs) materially distort the economic analysis based on cross-border capital flows. However, despite its significance, there is limited information on the true scale of this phenomenon. This paper focuses on Foreign Direct Investments (FDIs) and fills this gap by using an extensive list of FDIs determinants and estimating a gravity-like binary choice specification to assess how much bilateral FDIs are driven by economic integration motives versus profit shifting opportunities. We find that the share of so-called phantom FDIs, after rising in 2010–15, stabilized at around 40% of total FDIs in recent years and that this share is systematically larger in OFCs, reconciling available evidence on the abnormal amount of recorded FDIs in these countries.

The impact of restrictions on FDI

with Flavia Corneli, Valerio Nispi Landi and Alessandro Schiavone

Questioni di Economia e Finanza (Bank of Italy Occasional Papers) N. 656, 2021

In the 1990s and 2000s most countries, including many emerging economies, lifted some barriers to FDI along with trade liberalization; since the global financial crisis this trend has slowed. In this paper, we assess the impact of FDI restrictions on gross in flows by exploiting the sectoral dimension of FDI flows and of the regulatory restrictiveness index (RRI) reported in the OECD databases. In a sample of 17 OECD countries and 23 sectors over the time span 2012-2018, we find that FDI restrictions significantly dampen foreign investments in the manufacturing and services sectors, particularly when they limit foreign equity acquisitions. We also consider restrictions motivated by national security considerations, which are not scored in the RRI; like other controls involving screening schemes, they have not had any significant impact on the size of FDI flows.

Page updated

Google Sites

Report abuse