Economy & Markets

Edited by Donato Masciandaro and Gianmarco Ottaviano

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2023-01-23 Gianmarco Ottaviano

Reglobalization: From the Supremacy of Economics to that of Politics?

Starting from the time of the Second World War, precisely to counter some of the causes of the conflict – as well as to stem some of its consequences – an international, diplomatic, and political movement arose aimed at achieving integration of the markets in various countries; integration that was global and multilateral, meaning that it would leave nobody out. This, for two reasons: first of all, with the aim of stability, i.e. to avoid the creation of opposing blocs; and secondly, for reasons of inclusiveness, to prevent a situation in which large industrialized countries would reach agreements ...

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2022-12-13 Donato Masciandaro

Short-sighted Monetary Policy: A Winning Horse or a Scapegoat?

The Fed and the ECB are by now like the Pythia of the Oracle of Delphi: they speak little, and poorly. They must always be interpreted, with all of the related unknowns. It’s an opportunistic strategy, that increases the risk of stagflation. To understand why, let’s set some ground rules. We’ll start from the fact that both central banks want to fight inflation, and bring interest rates onto a path in which the remuneration of assets, both real and financial, and thus interest rates, is compatible with price growth of 2%, by 2024. To be clearer, the starting assumption means basing monetary ...

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2022-11-08 Donato Masciandaro, Gianmarco Ottaviano

Has Financial Fair Play Changed the European Soccer Industry?

Last summer, the president of the FIGC, Gabriele Gravina, spoke to Sky Sport to present the twelfth edition of the Soccer Report, developed by the FIGC Study Center, in collaboration with AREL and PwC Italia. The report had good and bad parts, we could say, even though there was a lot more bad than good.  “The data in our Soccer Report is ruthless as always […] in 12 years we have accumulated aggregate losses of 4.1 billion euros; we have lost one million euros a day […] 79% of our clubs have closed their accounts with losses. In the last 12 years our world has practically doubled its debts, ...

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2022-10-03 Donato Masciandaro

Monetary Normalization: The Lesson of Whatever It Takes

On July 26, 2012, Mario Draghi pronounced the words that would enter the Treccani Dictionary as an expression that “opened another, unprecedented horizon in European politics.” To shed light on the significance of “whatever it takes,” we can tell the story of the evolution of the monetary announcement as an opera in three acts. Act I: We are at the end of the 1970s, when the dominant problem for the policies of advanced countries is to defeat the Great Inflation. Economic analysis offered a recipe to obtain an effective monetary policy, that was based on two ingredients, mixed together: ...

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2022-09-07 Gianmarco Ottaviano

Gorbachev’s Ambivalent Legacy in Russia

In the Bible (Daniele, 2:31-35) King Nebuchadnezzar dreamed of a colossal statue with a head made of gold, the chest and arms of silver, the stomach and hips of bronze, the legs of iron and the feet made partly of iron and partly of clay. A stone broke off the mountain and hit the statue’s feet, smashing them and making it collapse. According to the prophet the story is a metaphor for the succession of earthly kingdoms, destined sooner or later to collapse due to the weakness of the values on which they are founded. The Soviet Union dissolved on December 26, 1991. At the start of that year it ...

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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 ...

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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 ...

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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 ...

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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 ...

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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 ...