Research

What are the macroeconomic impacts of tariffs on final goods versus intermediate inputs? We set up a two-region, multi-sector model with sticky prices and wages and global production networks. We show that import tariffs on final goods have a smaller negative impact on GDP compared to tariffs on intermediate inputs, as final goods can be more readily substituted with domestic alternatives. In contrast, tariffs on intermediate inputs lead to larger output losses, given the limited substitutability of foreign inputs and their role in global supply chains. Moreover, inflation persistence is lower under tariffs on final goods, whereas tariffs on intermediate goods amplify cost pressures through production linkages. The results imply that a revenue-equivalent approach to import tariffs, targeting only final goods, can cushion the adverse effects of trade wars.

Coverage: VoxEU.org (May 2025), Hutchins Roundup (Aug. 2025), Speech by ECB Executive Board Member I. Schnabel at the EIB Chief Economists’ meeting (Sep. 2025), Keynote speech by ECB President C. Lagarde at the Bank of Finland’s 4th International Monetary Policy Conference (Sep. 2025), Keynote speech by ECB Chief Economist P. Lane at the 15th workshop on exchange rates (Dec. 2025).

Presentations (incl. scheduled and by co-authors): Sailing the Macro Workshop (Sep. 2025), MMF Annual Conference (Sep. 2025).

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This paper studies, analytically and quantitatively, the occurrence of demand-deficient recessions due to uninsurable unemployment risk when jobs are endogenously destroyed. The ensuing unemployment fears induce a precautionary saving motive that counteracts the desire to borrow during recessions: negative productivity shocks may cause falling natural interest rates and positive unemployment gaps. Analytically, these demand-deficient recessions are shown to require a lesser degree of real wage rigidity when jobs are destroyed endogenously rather than exogenously. Quantitatively, the demand-deficient nature of supply-driven recessions can only be captured when accounting for endogenous job destruction.

Previous versions: [SSRN, Mar. 2024] [Bank of Italy Working Paper No. 1444, Mar. 2024].

Does monetary policy face a trade-off between stabilising inflation and unemployment as soaring energy prices hit the unemployed harder than the employed? Data from the euro-area Consumer Expectations Survey show that the jobless not only consume less but also devote a higher proportion of their consumption to energy. I account for this evidence into a tractable heterogeneous-agent New Keynesian model with labour market frictions and energy as a complementary input in production and as a non-homothetic consumption good: the unemployed consume less due to imperfect job-loss insurance and, since preferences are non-homothetic, allocate a larger share of this lower consumption to energy. The heterogeneous exposure of the labour force to rising energy prices induces an endogenous trade-off for monetary policy, whose optimal response involves partly accommodating inflation to limit the increase in unemployment and, therefore, prevent workers from becoming more exposed to the shock by losing their jobs.

Previous versions: [SSRN, Jun. 2024] [Bank of Italy Working Paper No. 1450, Mar. 2024].

Awards: Finalist for the QCGBF 2024 Young Economist Prize.

Coverage: centralbanking.com (Mar. 2024, Apr. 2024, Jul. 2024), SUERF Policy Brief No. 899 (Jun. 2024), ECB Monetary Policy Strategy Assessment 2025, Faculti.net interview.

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We examine the extent to which labor market reforms of temporary contracts introduced in Italy at the beginning of the century influenced aggregate productivity via their effects on allocative efficiency. Using firm-level data from the Italian manufacturing sector, we compute the extent of resource allocation by the covariance between firm size and productivity, and we identify the impact of the reforms by exploiting the variation in their implementation across sectors and regions. Our results suggest that the reform of apprenticeship contracts has increased the size-productivity covariance, and this aggregate effect can be rationalized through a theoretical model where the apprenticeship contract reform allows highly productive firms to gain market shares by improving their training efficiency, and by inducing them to turn a higher fraction of apprentices into permanent workforce. By contrast, the deregulation of the use of fixed-term contracts shows heterogeneous effects, with negative results among regions with long labor court disputes, and positive ones among those with less lengthy settlement procedures. The legal uncertainty associated with the reform might have reduced the incentive to use fixed-term contracts for productive firms located in regions where judicial disputes take longer to be settled.

Previous version: [DEM Working Paper No. 2020/1].

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