Economy & Markets
Edited by Donato Masciandaro and Gianmarco Ottaviano
The Role of the State in the New Phase of Globalization
In the period after the Second World War, the design of global markets was executed based on a strong trust in the ability for self-regulation under the auspices of multilateral international organizations such as the World Bank, the International Monetary Fund, and the World Trade Organization. The idea was that globalization could produce benefits in terms of economic development and wellbeing for all of the countries in the world. This did happen in large part, in the sense that a series of indicators of poverty and exclusion, especially in developing countries, showed improvement in part thanks ...
The Fed Floats between Wall Street and the White House
The beginning of 2023 has seen the Federal Reserve continue to pursue rate rises, but at a slower pace. The Fed perseveres in its policy of “getting by”: decisions are made meeting by meeting, and the only goal seems to be to avoid mistakes, floating between the desires of the financial markets, that believe inflation “has fallen,” and those of the Biden administration, that claims it is “still high.” Chair Jerome Powell and his colleagues are pursuing the same policy inaugurated last year, that does not entail any transparency on the future path of interest rates, thus not allowing ...
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 ...
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 ...
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, ...
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: ...
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 ...
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 ...
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 ...
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 ...