Suchergebnisse

The real world is characterized by the presence of imperfections in goods, financial and labour markets. These imperfections have the potential to create links among those markets that differ in a relevant way from those outlined in the standard model. In financial markets, imperfections can alter the efficiency of the economy and thus cause unintended effects on goods and labour markets. Moreover, in the presence of market distortions, the interaction between policies and institutions becomes a critical aspect. This book, which brings together essays from distinguished scholars on this subject, provides new insights on how these imperfections affect the outcomes of real-world markets.

In this paper we question the idea that the deduction of debt interest is always an effective policy instrument to spur firm investment. We analyse the investment decision in presence of a borrowing constraint on the amount of debt that the firm can raise. We show that if the debt interest rate is decreasing in the firm's capital accumulation and another financial resource more expensive than debt is available (at least for levels of debt lower than the upper bound), then the deduction of the debt interest from taxes on capital income may reduce firm investment. This theoretical result is relevant for economic policy decisions when financial intermediaries are not willing to finance beyond a certain threshold but firms have access to other sources of finance.

pt. I. Theories -- 1. Optimal growth theory revisited / Olivier de la Grandville -- 2. Continuous-time approach modelling in an application to the Italian economy / Daniela Federici and Enrico Saltari -- 3. The role of demand factors in the determination of the GDP growth rate / Renato Paniccia and Stefano Prezioso -- 4. Financial crises, limited-asset market participation, and banks' balance-sheet constraints / Elton Beqiraj, Giovanni di Bartolomeo, and Marco di Pietro -- 5. Secular stagnation : insights from a New Keynesian model with hysteresis effects / Bas Van Aarle -- pt. II. Policies -- 6. Public finance and optimal inflation rate / Giovanni di Bartolomeo and Patrizio Tirelli -- 7. The long-term effects of government budget constraints on GDP growth : an empirical study on OECD countries (1980-2009) / Silvia Fedeli and Francesco Forte -- 8. On productivity as an intermediate target for economic policy / Andrew Hughes Hallett -- 9. Unifying framework for the evaluation of the composition of foreign exchange reserves for emerging economies : the case of South Africa / Lebogang Meteane and Willi Semmler -- 10. Search frictions and the long-run effects of labor-market policies / Giuseppe Ciccarone, Francesco Giuli, and Enrico Marchetti.

We study the dynamic problem of pollution control enacted by some policy of regulation and mitigation. The dynamics of the transition from one level of regulation and mitigation to another usually in-volves inter-temporal trade-offs. We focus on how different policymaker's time horizons affect these trade-offs. We refer to shorter lengths in policymaker's time horizons as political short-termism or inat-tention, which is associated with political economy or information constraints. Formally, inattention is modeled by using Nonlinear Model Predictive Control. Therefore, it is a dynamic concept: our policy-makers solve an inter-temporal decision problem with finite horizon that involves the repetitive solu-tion of an optimal control problem at each sampling instant in a receding horizon fashion. We find that political short-termism substantially affects the transition dynamics. It leads to quicker, but costlier, transitions. It also leads to an under-evaluation of the environmental costs that may accelerate climate change.