Journal of International Economics, volume 102, pp 291-309, September 2016.
FEEM Award of the European Economic Association
Powering Education,CEP Discussion Paper 1438.
With Paolo Lucchino (LSE).
The project was awarded the Coca-Cola Challenge Prize of the World Economic Forum, featured in the Guardian and the Wall Street Journal.
Italy's Productivty Conundrum, European Commission Discussion Paper 030.
With Sara Calligaris (OECD), Massimo Del Gatto (Pescara), Gianmarco Ottaviano (LSE), and Fabiano Schivardi (Bocconi). Project financed by the DG ECFIN, European Commission
Work in Progress
Banks, Credit, and Productivity Growth
With Filippo Di Mauro (ECB) and Gianmarco Ottaviano (LSE). Project financed by the ECB and the EIB.
Financial institutions are key to allocate capital to its most productive uses. In order to examine the relationship between productivity and bank credit in the context of different financial market set-ups, we introduce a model of overlapping generations of entrepreneurs under complete and incomplete credit markets. Then, we exploit firm-level data for France, Germany and Italy to explore the relation between bank credit and productivity following the main derivations of the model. We estimate an extended set of elasticities of bank credit with respect to a series of productivity measures of firms. We focus not only on the elasticity between bank credit and productivity during the same year, but also on the elasticity between credit and future realised productivity. Our estimates show a clear Eurozone core-periphery divide, the elasticities between credit and productivity estimated in France and Germany are consistent with complete markets, whereas in Italy they are consistent with incomplete markets. The implication is that in Italy firms turn to be constrained in their long-term investments and bank credit is allocated less efficiently than in France and Germany. Hence capital misallocation by banks can be a key driver of the long-standing slow productivity growth that characterises Italy and other periphery countries.
Not in my backyard: the trade effects of neighbour’s civil war - the case of Syria
With Massimiliano Calì (World Bank)
We look at the trade effect of civil wars that extend beyond the country’s borders affecting the neighbouring countries. In order to disentangle various mechanisms through which a civil war can affect neighboring countries’ trade, we focus on the impact of the Syrian conflict on Lebanon and Jordan. We exploit firm level data for both Lebanese and Jordanian exporters, in order to identify and quantify the effect of the war on the Syrian market, the markets that exporters used to serve passing through Syria, and other markets. We distinguish between the intensive and extensive margin. It turns that the war can have positive effects on the extensive margin as the destruction of Syrian firms that served either Syria itself or markets abroad can be replaced by neighbor’s firms. This effect is significant for Lebanese firms and not for Jordanian firms suggesting that pre-war ties between Syria and Lebanon, which are stronger than with Jordan, can play an important role.
Foreign Capital Flows and Income Inequality in Emerging Countries
Some developing countries experience a prolonged period of real exchange rate overvaluation after they have opened their capital and current accounts. This real exchange rate overvaluation tend to produce, or at least is associated with, rising income inequality within the society. In this work we present a general equilibrium model that disentangles the mechanisms that can link foreign capital flows to income inequality through the impact of real exchange rate adjustment on the price of labor and quantity of employment. We show that the prediction of the model is consistent with the case of Argentina.
Fiscal integration at the time of Brexit: the way forward for the eurozone, UniCredit Economics Special, September 2016.
Business Opportunities in Emerging Markets: which country and industry for exporters, UniCredit Global Themes Series, no. 36, July 2016, with Marco Valli (UniCredit).
Brexit impact on EM currencies, UniCredit FX Perspectives, no. 11, July 2016, with Vasileios Gkionakis (UniCredit), Kathrin Goretzki (UniCredit).
Debt and Growth: from the Great Divergence to Secular Stagnation?, UniCredit Economics Thinking, no. 5, April 2016.
One year of quantitative easing, UniCredit Economics Special, March 2016.
Global Challenges and Prospects for Emerging Markets: Commodity, China, and Capitals, UniCredit Global Themes Series, no. 30 , January 2016.
La Repubblica coverage
Assistant Professor of Economics,
Trinity College Dublin