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Using a novel rich dataset at the regional level, this paper provides new empirical evidence on the €fiscal transmission mechanism in the Eurozone. Our baseline estimates reveal a government spending relative output multiplier of 2.9, an employment multiplier of 1.9, and a cost per job created of €24,000. Moreover, we €find that a regional €fiscal stimulus leads to a signi€ficant increase in private investment, productivity, durable consumption, and real wages together with a signi€ficant rise in total hours worked driven by changes in the extensive margin (total employment), whereas the intensive margin (hours per worker) barely reacts. We estimate only small regional €fiscal spillovers but detect notable state dependencies. Regional fi€scal multipliers are larger in economic recessions, during €fiscal consolidations, and in the core countries of the Eurozone.

Governments worldwide are adopting nuanced policy measures to reduce the number of Covid-19 cases with minimal social and economic costs. Epidemiological models have a hard time predicting the effects of such fine grained policies. We propose a novel simulation-based model to address this shortcoming. We build on state-of-the-art agent-based simulation models but replace the way contacts between susceptible and infected people take place. Firstly, we allow for heterogeneity in the types of contacts (e.g. recurrent or random) and in the infectiousness of each contact type. Secondly, we strictly separate the number of contacts from the probabilities that a contact leads to an infection. The number of contacts changes with social distancing policies, the infection probabilities remain invariant. This allows us to model many types of fine grained policies that cannot easily be incorporated into other models. To validate our model, we show that it can accurately predict the effect of the German November lockdown even if no similar policy has been observed in the time series that were used to estimate the model parameters.

In this work we discuss the research findings from the labour-augmented Schumpeter meeting Keynes (K+S) agent-based model. It comprises comparative dynamics experiments on an artificial economy populated by heterogeneous, interacting agents, as workers, firms, banks and the government. The exercises are characterised by different degrees of labour flexibility, or by institutional shocks entailing labour market structural reforms, wherein the phenomenon of hysteresis is endogenous and pervasive. The K+S model constitutes a laboratory to evaluate the effects of new institutional arrangements as active/passive labour market policies, and fiscal austerity. In this perspective, the model allows mimicking many of the customary policy responses which the European Union and many Latin American countries have embraced in reaction to the recent economic crises. The obtained results seem to indicate, however, that most of the proposed policies are likely inadequate to tackle the short-term crises consequences, and even risk demoting the long-run economic prospects. More objectively, the conclusions offer a possible explanation to the negative path traversed by economies like Brazil, where many of the mentioned policies were applied in a short period, and hint about some risks ahead.

This paper assesses causes and consequences of fiscal redistribution in Brazil. The framework proposed allows evaluating in an integrated manner the impacts of government-sponsored actions in inequality and mean income changes on social welfare, addressing both static and dynamic implications. To the best of our knowledge, this is the first microsimulation attempt to gauge actual fiscal policy redistribution changes over time in Brazil. The study develops an empirical methodology that allows consistent comparisons among the years 1995, 2003, 2009, and 2015. We focus on disposable income changes between 2003 and 2015. In this period, the Gini index-based social welfare grew 4.86 per cent per year; that is, higher than the growth rates associated with both initial income (4.36 per cent) and final income (4.47 per cent), but not with gross income (4.91 per cent). The results suggest that official cash transfers accelerated the growth of social welfare while direct and indirect tax changes operated in the opposite direction. The model outcomes allow assessing the role played by specific fiscal instruments among various taxes and cash transfer programmes. The family grant programme was the best-targeted action in the 2003-15 period. Its contribution to the rise of social welfare is 2.7 times the contribution to the rise of mean income. If one compares family grant poverty impacts with the second best targeted cash transfer programme, each monetary unit spent generated a 119.73 per cent higher impact.

In this work we discuss the research findings from the labour-augmented Schumpeter meeting Keynes (K+S) agent-based model. It comprises comparative dynamics experiments on an artificial economy populated by heterogeneous, interacting agents, as workers, firms, banks and the government. The exercises are characterised by different degrees of labour flexibility, or by institutional shocks entailing labour market structural reforms, wherein the phenomenon of hysteresis is endogenous and pervasive. The K+S model constitutes a laboratory to evaluate the effects of new institutional arrangements as active/passive labour market policies, and fiscal austerity. In this perspective, the model allows mimicking many of the customary policy responses which the European Union and many Latin American countries have embraced in reaction to the recent economic crises. The obtained results seem to indicate, however, that most of the proposed policies are likely inadequate to tackle the short-term crises consequences, and even risk demoting the long-run economic prospects. More objectively, the conclusions offer a possible explanation to the negative path traversed by economies like Brazil, where many of the mentioned policies were applied in a short period, and hint about some risks ahead.

This paper estimates the contribution of Foreign Direct Investment (FDI) to the Total Factor Productivity (TFP) of Bulgaria for the period 2004-2013. As predicted by theory, a positive relationship between TFP and FDI is documented. The standard Ramsey (optimal) growth model, augmented with the FDI channel is used to compare the speed of convergence to an identical setup without FDI. Convergence simulations prove that ignoring the implications of this model leads to a distorted view of the growth path of the economy. The results of the study can serve as justification for development of governmental strategies for attracting FDI inflows.

Using a parsimonious, analytically tractable dynamic model, we are able to explain up to 100 years of the available data on the dynamics of top-wealth shares for several countries. We build a micro-founded model of heterogeneous agents in which - in addition to stochastic returns on investment - individuals disagree marginally on their expectations of future returns and thus hold different asset positions. We show that, given a positive tax on capital gains, the distribution converges to a double Pareto distribution for which the degree of wealth inequality decreases with the tax rate. Closed-form solutions confirm that without government intervention there is infinite inequality. Moreover, transition dynamics are shown to increase with the tax rate. We discuss the model's ability to match the measured wealth inequality for the US, the UK, Sweden, and France, both in levels and transitions. The heterogeneous development in the different countries and across time can be traced back to different tax regimes.

Historically Switzerland is characterized by numerous small towns. During the twentieth century, the image of Swiss cities has changed: the expansion of the city has reached the limits of administrative urban borders, penetrating in peripheral locations. The main reasons concern not only the territorial environment, but also the possibility to support public services and public investments. Currently, urban agglomerations include dozens of municipalities and this is seen as a virtuous strategy to provide basic public services and utilities in peripheral areas. Swiss federalism has fostered the development of a large number of small and medium sized cities. This creates the conditions for polycentric and decentralized settlements. At this stage of the territorial and institutional transformation, the understanding of different municipalities? roles is essential: the ?work? and ?live? functions are spread irregularly throughout the territory. Some core cities are traditionally business locations but the progressive urbanization has enhanced the attractiveness of the belt municipalities, for both residential and business purposes. We try to identify the different functions and relations between 47 agglomerated municipalities in southern Switzerland (Ticino), using a territorial agent based model. The analysis focus on four analytical dimensions: economic competitiveness, attractiveness, openness and social equality. Our research adopts a bottom up approach to urban systems, considering the agglomeration mechanism and effects of different regional and urban policies. Urban residential dynamics are the result of simultaneous household?s choices; thus, no program can be planned, without the ability to understand and predict the individual decisions in the short and long term. Recently, agent based models (ABMs) have been proposed in order to support urban policy makers. Simulating the individual actions of diverse agents on a real city and measuring the resulting system behaviour and outcomes over time, they provide a good test bed for evaluating the impact of different policies Our analysis starts from the micro level at the smallest territorial unit (municipalities). The database is created merging the Swiss official secondary data for one reference year (2011) with Eurostat and OECD Regpat. The model, linking territorial characteristics and agents, simulates the single location choices and formation of urban development patterns, which are influenced by residential and industrial agglomeration forces and policy interventions. The results highlight that the understanding of municipalities? functions on the territory appears to be essential for designing a solid institutional agglomeration (or city). From a methodological point of view, we contribute to improve the application of territorial ABMs. Finally, our results provide a robust base to evaluate in a dynamic way various political interventions, in order to ensure a sustainable development of the agglomeration and the surrounding territories.

In this paper an agent-based model of endogenously evolving migrant networks is developed to identify the determinants of migration and return decisions. Individuals are connected by links, the strength of which declines over time and distance. Methodologically, this paper combines parameterization using data from the Mexican Migration Project with calibration. It is shown that expected earnings, an idiosyncratic home bias, network ties to other migrants, strength of links to the home country and age have a significant impact on circular migration patterns. The model can reproduce spatial patterns of migration as well as the distribution of number of trips of migrants. It is shown how it can also be used for computational experiments and policy analysis. ; In dieser Studie wird ein agentenbasiertes Modell zum Migrationskreislauf mexikanischer Migranten in die USA eingeführt. Es handelt sich um ein vollständig empirisch fundiertes Modell, d.h. alle Parameter basieren auf empirischen Schätzungen. Insbesondere wurden die Koeffizienten der Verhaltensregeln der Individuen mit geläufigen ökonometrischen Methoden geschätzt. Hierbei wurde das Mexican Migration Project (MMP) verwendet, ein großer Haushaltsdatensatz. In einem ersten Schritt wird gezeigt, dass erwartetes Einkommen, eine idiosynkratische Heimatpräferenz und Netzwerkbeziehungen zu anderen Migranten die wichtigsten Determinanten der Migrationsentscheidung von Angehörigen einer Generation mexikanischer Migranten sind. Die Anzahl und Stärke der Beziehungen in das Heimatland beeinflusst hingegen die Rückkehrentscheidung. Es wird zudem gezeigt, dass die Verteilung der Migranten über die Städte der USA hinweg einer Power-Law-Verteilung folgt. Dies wird erklärt durch einen Preferential-Attachment'-Prozess, in dem Migranten häufig die Städte als Zielort wählen, in denen sie Bekannte und Verwandte haben. Die Verteilung der Anzahl der Migrationsbewegungen ist negativ binomialverteilt, was dadurch zu erklären ist, dass es viel wahrscheinlicher ist, dass Migranten nach der ersten Migrationsbewegung eine weitere Migrationsbewegung durchführen, als dass sie das erste Mal migrieren. Der Grund hierfür ist, dass sich die Entscheidung, zum zweiten Mal zu migrieren, stark von der unterscheidet, zum ersten Mal auszuwandern, weil migrationsspezifische Erfahrungen die Entscheidung erleichtern. Das agentenbasierte Modell ist in der Lage, beide Verteilungen und zwei aggregierte Zeitreihen nachzubilden. Daher wird es für geeignet befunden, Politikanalysen durchzuführen. Es wird gezeigt, wie mit Hilfe des Modells der Effekt einer Erhöhung der mexikanischen Löhne und einer Intensivierung der Grenzkontrollen untersucht werden kann.

We determine optimal monetary policy under commitment in a forwardlooking New Keynesian model when nominal interest rates are bounded below by zero. The lower bound represents an occasionally binding constraint that causes the model and optimal policy to be nonlinear. A calibration to the U.S. economy suggests that policy should reduce nominal interest rates more aggressively than suggested by a model without lower bound. Rational agents anticipate the possibility of reaching the lower bound in the future and this amplifies the effects of adverse shocks well before the bound is reached. While the empirical magnitude of U.S. mark-up shocks seems too small to entail zero nominal interest rates, shocks affecting the natural real interest rate plausibly lead to a binding lower bound. Under optimal policy, however, this occurs quite infrequently and does not require targeting a positive average rate of inflation. Interestingly, the presence of binding real rate shocks alters the policy response to (non-binding) mark-up shocks. JEL Klassifikation: C63, E31, E52 .

With data from the World Bank Enterprise Survey, this paper examines how firm-level resilience capabilities interact with government support in the reduction of lay-offs among formal firms in Central America. We estimate two latent variables to approximate resilience-related capabilities before (static) and after (dynamic) the COVID-19 pandemic. We create four counterfactual groups using a Markov chain Monte Carlo simulation to assess which resilience capabilities help firms cope better, with and without government support. We find that support policies play a marginal role among most groups, except in the dynamic resilient group, where receiving government support does shrink the probability of lay-offs.

In order to slow the spread of the CoViD-19 pandemic, governments around the world have enacted a wide set of policies limiting the transmission of the disease. Initially, these focused on non-pharmaceutical interventions; more recently, vaccinations and large-scale rapid testing have started to play a major role. The objective of this study is to explain the quantitative effects of these policies on determining the course of the pandemic, allowing for factors like seasonality or virus strains with different transmission profiles. To do so, the study develops an agent-based simulation model, which is estimated using data for the second and the third wave of the CoViD-19 pandemic in Germany. The paper finds that during a period where vaccination rates rose from 5% to 40%, rapid testing had the largest effect on reducing infection numbers. Frequent large-scale rapid testing should remain part of strategies to contain CoViD-19; it can substitute for many non-pharmaceutical interventions that come at a much larger cost to individuals, society, and the economy.

For monetary policy guiding inflation expectations provides an instrument to achieve price stability. However, expectation uncertainty may undermine monetary policy's ability to stabilise the economy. This study examines the effects of inflation expectation uncertainty on inflation, inflation expectations and the output gap by means of a structural VAR with stochastic volatility in mean. Inflation expectation uncertainty negatively affects the inflation rate and the output gap, without having a distinct effect on the level of expectations. This result is replicable with a model in which uncertainty is approximated by a cross-sectional survey measure. Furthermore, simulating an uncertainty shock in a DSGE model shows that the demand channel dominates the supply channel of an inflation expectation uncertainty shock. ; Die Steuerung der Inflationserwartungen ist ein geldpolitisches Instrument zur Erreichung von Preisstabilität. Allerdings kann Erwartungsunsicherheit die Fähigkeit der Geldpolitik zur Stabilisierung der Wirtschaft untergraben. In dieser Studie werden die Auswirkungen der Unsicherheit der Inflationserwartungen auf die Inflation, die Inflationserwartungen und die Produktionslücke mit Hilfe eines strukturellen VAR mit stochastischer Volatilität untersucht. Es zeigt sich, dass sich Unsicherheit der Inflationserwartungen negativ auf die Inflationsrate und die Produktionslücke auswirkt, ohne einen deutlichen Effekt auf das Niveau der Erwartungen zu haben. Dieses Ergebnis ist mit einem Modell reproduzierbar, bei dem die Unsicherheit durch ein Querschnittserhebungsmaß approximiert wird. Darüber hinaus zeigt die Simulation eines Unsicherheitsschocks in einem DSGE-Modell, dass der Nachfragekanal den Angebotskanal eines Unsicherheitsschocks der Inflationserwartung dominiert.

In Switzerland, transportation represents 41% of CO2 emissions from energy combustion (2016), a much higher share than in the European Union (EU) (28%) or even the USA (34%). While total Swiss CO2 emissions decreased by 10% between 1990 and 2016, CO2 emissions from transport increased by 4.5% over the same period (all data from UNFCCC database). Our projections (Vielle and Thalmann, Updated emissions scenarios without measures, 1990-2025, Tech. rep., 2017) show that the contribution of the transport sector would remain constant in a scenario taking into account climate and energy policy measures already implemented or adopted in 2016. In the EU, several initiatives have already been introduced to limit the use of petroleum products in transportation. This paper presents deep decarbonization pathways for Switzerland that demand a strong contribution from the transport sector. We find that a preferential treatment of transportation fuels raises the welfare cost of decarbonization by about 18% relative to a uniform tax on all fossil fuels. This is of similar magnitude as the preferential treatment of large CO2 emitters through an emissions trading system. We also find that the preferential treatment leads to a share of fossil fuels in total energy for road transportation in 2050 which is approximately twice as high as in the uniform treatment.