Economy & Markets

Edited by Donato Masciandaro and Gianmarco Ottaviano

2022-07-13 Elisa Borghi, Donato Masciandaro

Urban Governance, Economic Growth, and Civic Capital: History Counts, in the South As Well

What is the most common interpretation the media have given of the recent local elections? The answer: a major test of the strength of the center-left and center-right coalitions in view of the upcoming national political elections. No surprise here, provided that this perspective never makes us forget how important urban governance can be to influence the economic and civic growth of citizens; even after centuries. This is one of the most intriguing results of a recent current of academic research that takes the name of “persistence.” The idea is ultimately simple: the economic and social ...

2022-05-13 Donato Masciandaro

War and the Central Banks: Many Different Standards

On March 10, the ECB opened its press release relating to monetary policy decisions with the Russian aggression against Ukraine, defining it as a "watershed moment for Europe." From that point on it was clear that the evolution of the war would be crucial to orient the navigation of monetary policy, that must find a balance between avoiding the risk of inflation, on the one hand, the reducing the risk of recession, on the other. In this sense, in April 2022 the ECB announced a strategy based on two successive steps: first a gradual reduction of the emission of liquidity on the markets, and only ...

2022-03-18 Donato Masciandaro

Laocoön and the Two Serpents: Economic Growth, Corruption, and Money Laundering

Before the military aggression by Putin’s Russia against Ukraine changed the current short-term scenario, all of the media were celebrating the Italian economic recovery. Italy was defined as the “hare” of the euro area, using the most recent data from the European Commission, relating to 2021. Italian GDP growth was 6.5%, versus the average of 5.3%, and the figures for countries such as Germany and Spain, that reached economic growth rates of 5% and 2.8%, respectively; among the large countries in the euro area only France did better, with growth of 7%. But if we expand the view just a ...

2022-02-16 Gianmarco Ottaviano

Economic Sanctions Against Russia: The Continuation of Policy By Other Means

“War is a mere continuation of policy by other means. We see, therefore, that War is not merely a political act, but also a real political instrument, a continuation of political commerce, a carrying out of the same by other means.” Thus wrote the Prussian general Carl Von Clausewitz two centuries ago in his book On War, a treatise of military strategy widely read in the last century, also in Marxist and Leninist circles; to the point of becoming a part of the study programs of Soviet military academies in the years in which Vladimir Putin began his training at the KGB school in Leningrad ...

2022-01-03 Donato Masciandaro

European Green Monetary Policy: A Double-Edged Sword

From the standpoint of European monetary policy, 2021 was an important year, with the announcement by the European Central Bank (ECB) of a revision in its strategy. The founding pillar is very clear: in accordance with the European treaties, the primary goal of monetary policy will continue to be the stability of the internal value of the euro. Given that primary goal, the ECB will have the secondary goal of supporting the other aims of the Union’s economic policy. In the list of secondary aims, the quality of the environment has appeared for the first time. Then, in a parallel document, the ...

2021-12-14 Gianmarco Ottaviano

Green Jobs and the Challenge of the Ecological Transition

According to the International Labor Organization (ILO), the United Nations agency that deals with the labor market, the transition towards a green economy can act as a new engine for growth thanks to the creation of “good” jobs in both advanced and developing countries. The ILO recognizes, though, that this outcome is certainly not guaranteed, because new green jobs will not automatically also be good jobs. They will become good only through effective action, adopting economic and social policies that help workers adapt to the new market dynamics. This means first of all policies aimed at ...

2021-11-02 Donato Masciandaro

Si vis pacem, para bellum: Afghanistan, the Taliban, and Financial Quarantine

The European Union is deciding if and when to reopen relations with the new government of Afghanistan. The EU, like almost all of the international community, has stated that it is worried about possible actions by the Taliban regime that could violate the population's civil and political rights. So it is not considering the possibility of a formal recognition of the regime. At the same time, there must be a decision on how to open a "calibrated relationship" with the Taliban government – the expression used by Brussels – to prevent other countries from gaining additional space, countries ...

2021-10-07 Gianmarco Ottaviano

Kabul, Beijing, and the Geopolitics of the Ecological Transition

Afghanistan is a land of treasure. Recently, the international press, and it appears, the new Taliban government as well, have been anxiously following the fate of the Bactrian treasure, discovered in the north of Afghanistan shortly before the Soviet invasion of 1979. In six tombs that can be dated from the first century BCE to the first century CE, archeologists led by Viktor Sarianidi found more than 20,000 artifacts, including gold amorettos, dolphins, divinities, and dragons studded with turquoise, cornel, and lapis lazuli, but also rings, coins, weapons, earrings, bracelets, necklaces, and ...

2021-08-27 Donato Masciandaro

ECB: The New Route Between Hawks and Doves

Last July, the president of the European Central Bank Christine Lagarde announced a strategy review of ECB monetary policy. There was great anticipation of what the new inflation target would be. The expectations were understandable: explicitly stating the inflation target, as we will see later, is the key to monetary policy, representing the main tool to orient expectations. The importance of the link between the inflation target and management of expectations is an issue on which hawks and doves can generally agree. But things change when we question the quantitative formulation of that target. It ...

2021-08-13 Gianmarco Ottaviano

Brexit and the City

In Italy, we cut red ribbons at Christmas when we open gifts. Across the Channel, cutting red ribbons is an obsession that dominates public debate, reaching a fever pitch when the European Union is involved. Naturally, we’re not talking about the ribbons used for holidays, but of “red tape,” the term used in the United Kingdom to refer to an apparently infinite series of bureaucratic procedures that prevent the animal spirits of the market from giving free play to their creative instincts. The use of the term red tape comes from the fact that in the past, legal documentation was in fact ...