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Forthcoming articles in Economia Politica



Forthcoming articles in Economia Politica (2001-2002)

The following articles have been accepted by the Editorial Board of the Journal and they will be
published in forthcoming issues.

Léon Walras and the Mathematical Method of Pure Economics: Beyond Formalism (J.E.L. B31)
by Roberto Baranzini and Elena Tatti
Through an analysis of the peculiarities of the mathematical method (or rational method) as
advocated by Walras, this paper replaces in the framework of Walras‟s epistemological
considerations his comments on the possibility and necessity of applying the mathematical method to
political economy. The study of Walras‟s definition of the mathematical method allows us to get rid
of a common misunderstanding which considers it as „axiomatic‟, and more generally, to differentiate
it from today‟s conception. This approach also reveals two phases in Walras‟s scientific construction:
i) defining „ideal types‟ on the basis of „real types‟; ii) deducing from those „ideal types‟ the basic
principles of the theory of the value of exchange. We then refer to Vacherot‟s theory of knowledge
and consider its implications for Walras‟s epistemology, an approach which not only confirms our
former results, but also clarifies a few important points. First, to understand Walras‟s contention that
a theory should not be confronted to empirical verifications, but only to its applications, one must take
into account the fact that it is impossible to limit any scientific concept to a collection of empirical
„perceptions‟. It is the ideal and perfect nature of intellectual concepts which makes it useless to try
and compare those scientific abstractions to real objects. Second, scientific knowledge, built on such
conceptual abstractions unbounded by empirical facts, is the expression of a perfection, which is
opposed to a necessarily imperfect reality. In such a context, Walras explicitly defines the task of
science as being the formulation of an ideal towards which practice should be directed. Finally, as far
as the meaning of these „ideal types‟ is concerned, the reference to Vacherot‟s insights allows us to
stress that the notion of „truth‟ associated with a mathematical model, itself based on these „ideal
types‟, is a strong one. Abstractions, in mathematics as well as in any science based on rational
method, are analytical concepts which express the true essence of factual reality; they are objectives
for human actions, not yet in place, still to be fulfilled. Pure science formulates „what is‟, but this
idealised nature is also the goal to be pursued by humans; the outcomes of pure theory then take up a
new function, as examples for the improvement of the economic structure.
ROBERTO BARANZINI is professeur suppléant of economics at the Université de Lausanne,
Centre d‟études interdisciplinaires Walras-Pareto, BFSH 1, 1015 Lausanne-Dorigny
ELENA TATTI is assistante de recherche at the Université de Lausanne, Centre d‟études
interdisciplinaires Walras-Pareto, BFSH 1, 1015 Lausanne-Dorigny

Organizational Competition, Asset Specificity and Efficiency (J.E.L. L11-L22)
by Alberto Battistini
For investments which can be imitated, the degree of specificity to the counterparty crucially depends
on the place taken with respect to the competitors in the temporal sequence in which they are made,
that is, on being the leader, the follower and so on. On the contrary, this is not true for their return,
which depends on their novelty character and therefore remains unchancged until the next innovation.
As a consequence, for this class of investments, the (transaction) cost of specificity ends up by being
an 'organizational experimentation cost' in the sense that it will only be borne by the leader while it
can be saved by followers exploiting competition among counterparties. From this reasoning two
propositions follow. First, in explaining economic institutions, an 'organizational free-riding' problem

must be added to that of 'hold-up'. Second, a grouping form of economic organization, based on non
market relationships between groups and on market relationships within the group, can emerge as a
solution to the resulting tendency to over- or under-invest.
ALBERTO BATTISTINI is „dottore di ricerca‟ in economics at the Università degli Studi di Siena,
Facoltà di Economia 'R. Goodwin', Piazza San Francesco, 7, 53100 Siena; he is now working as
economic expert at the Ministry of Treasury, Budget and Economic Planning, via XX Settembre, 97,
00800, Roma; Via Confalonieri, 9 20125 Milano (home)

How Great Is the Virtue of Markets and Competition? (J.E.L. D00)
by Carlo Beretta
no.2, 2001
The drive for privatisation and liberalisation is still on the increase. However, the literature on contracts points
out that using prices to provide incentives is quite a crucial issue. Asymmetric information prevents markets
from working efficiently. Indeed, the origins of state failures do not differ from those of market failures.
Support for privatisation and liberalisation should be argued on a case by case basis, and not on general
assertions. A certain attention for public intervention and the implementation of the appropriate social and
institutional framework should not be abandoned.
CARLO BERETTA is professor of economics at the Università Cattolica di Milano, Facoltà di
Scienze Politiche, Largo Gemelli 1, 20123 Milano

Cooperation and Competition in the Learning Organization: Preliminar Results from a Simulation
Model (J.E.L.: O33, J41)
by Gian Carlo Cainarca and Francesca Sgobbi
no………….., 2001
The paper deals with the transaction of labour within the Learning Organisation (LO), i.e. the
organisation which turns knowledge creation and knowledge sharing into critical success factors. The
model of the LO has gained increasing attention from both the managerial and the academic world
thanks to its prospective capability to deal with higher degrees of uncertainty and change than the
“traditional” Fordist-Taylorist organisation. In the LO the emphasis on workers as potential
knowledge creators derives from recognising the presence of an “intellectual” component into the
supplied effort. As a consequence, the metaphor of labour as a “material resource” results no more
suitable, and new mechanisms are needed to motivate and to fuel the employees‟ commitment. In
particular, the paper models the interaction among workers at a LO where the principal sets a bonus
for those who provide the better performance both in terms of physical productivity and
organisational knowledge increase. The workers‟ commitment to the LO‟s targets results from the
contemporary presence of both co-operative and competitive forces. The model, which builds on
Akerlof‟s model of “gifts exchange” between employer and employees and on the closed rank
tournament theory, has been implemented into a simulation programme which relaxes the
neo-classical constraint on the individuals‟ perfect rationality. The parameters driving the tournament
outcome relate to the environment where the LO operates, on LO itself, and the characteristics of
workers, which are allowed for not homogeneity. The simulations point out the existence of a
threshold for the intensity of competition, beyond which the benefits resulting from the accelerated
accumulation of organisational knowledge are more than balanced by the lack of motivation of those
workers excluded from the competition for the higher bonuses. The simulations also show how the
co-operative rather than competitive nature of industrial relations within the LO depends from the
boundary conditions which shape the internal and external labour markets.

On the Theoretical System of the Young Sraffa (J.E.L.: B3)
by Duccio Cavalieri
no.1, 2001

The object of these pages is to revive a critical reflection on the significance of Sraffa‟s early
theoretical work in the five-year period running between 1925 to 1930. After identifying the main
interpretative issues, an original historiographyc hypothesis is formulated and attention is focused on
Sraffa‟s thought on the shape of cost curves and its consequences on the relationship between price
and quantity produced. Sraffa‟s criticism of Marshall‟s theory of value was not motivated by reasons
of personal convenience, as sometimes has been suggested. He believed that Marshall had severely
distorted Ricardo‟s theory of competitive value, by trying to rebuild it in terms of symmetric relations
of demand and supply, in the neoclassical language of market equilibrium. Even Sraffa‟s early
abandonment of his search on imperfect competition - a major element of discontinuity in his
theoretical path - may be traced to analytical and methodological reasons. Realising that his idea to
afford the study of the behaviour of an imperfectly competitive firm on the assumption that it was
faced with a subjective demand curve was in stark contrast both with the basic premises of an
objective theory of value and with his critique of the Marshallian method of partial equilibria, he
decided to opt for an entirely different analytical approach to the theory of price.
DUCCIO CAVALIERI is professor of economics at the Università di Firenze, Facoltà di
Giurisprudenza, Dipartimento di Scienze Economiche, Via Laura 48, 50121 Firenze.

In Praise of Rigidity. The «Fair Wage» between Law and Economics (J.E.L.: E24, J33, J53)
by Luigi Cavallaro
no.1, 2001
The aim of this paper is to verify the plausibility, in the light of economic theory, of the jurisdictional
guidelines of Italian Courts, which declares null and void all the clauses of individual labour contracts
fixing a lower wage than the collective bargaining, because of the breach of the «fair wage principle»
established by the article 36 of the Italian Constitution. It is suggested to forsake the neo-classical
view in economics to understand that the article 36 of the Italian Constitution plays a positive role
ensuring the optimal asset of labour market.
LUIGI CAVALLARO is judge of labour at the Tribunale di Palermo, Piazza Vittorio Emanuele
Orlando, 90100 Palermo.

On the Theory of the Firm. The Neoclassical View and the Kirznerian Approach (J.E.L. A12, B21, D21,
by Enrico Colombatto
no.2, 2001
This article questions the positive and normative conclusions of the neoclassical theory of the firm, and
of competition. In particular, the first part of this work focuses on the role of uncertainty and risk, on the
major features and weaknesses of the neoclassical notion of competitive equilibrium, on the role of the
entrepreneur. The second part of the paper presents the Austrian theory of the firm, of the entrepreneur,
as well as the concept of "entrepreneurial discovery". Its final pages highlight some doubts which the
Austrian approach has not been able to answer so far, and suggests an agenda for future research.
ENRICO COLOMBATTO is professor of economics at the Università degli Studi di Torino, Facoltà di
Economia, Corso Unione Sovietica, 218 bis, 10134 Torino

Technology Adoption and Spillover Effects (J.E.L.: J41, L20, O30)
by Luca Colombo
This paper examines, in an efficiency wages setting, the technology adoption problem faced by a
firm. It is shown that the adoption of new technologies may be delayed, or even that it does not take
place, for firms which are price makers on the labour market. A general result of inefficient

technology adoption is derived. This result follows from the impact of technology induced spillovers
effects on workers' reservation utility. Better technologies determine higher reservation utility levels
and this, in turn, implies that the firm must pay higher wages in order for the participation and the
incentive constraints of workers to be satisfied.
LUCA COLOMBO has a fellowship in Economics at the Università degli Studi dell‟Insubria and he
is doing research at the Università Cattolica del Sacro Cuore, Istituto di Economia e Finanza, Via
Necchi 5, 20123 Milano.

Habit Forming Preferences: The Role of the Rationality Hypothesis (J.E.L.: D11,D19)
by Maria De Paola
no……………, 2001
The aim of this paper is to present in a systematic and critical way the literature on habit forming
preferences in order to understand the role played in these models by the hypothesis on individual
rationality. Overall, the question raised is whether the possible causes of endogenous preference
depend on the hypothesis concerning individual rationality and whether the idea of endogenous
preferences is compatible with any of these hypotheses, or if, on the contrary, there is any extreme
rationality hypothesis that undermine its content. In trying to answer these questions the most
important myopic and rational habit forming models and the interpretation that the case base decision
theory gives to the phenomena of changing preferences are analysed.

Scale Effect and Factor Proportions Effect in Inter-industry Trade (J.E.L.: F1)
by Paolo Epifani
no……………, 2001
Trade theory predicts that increasing returns to scale and factor proportions are the main determinants
of international trade. Yet, it does not give a precise answer on the relative importance of each of
these causes of world trade, and on their joint interaction in determining inter-industry specialisation.
In this paper we formulate a model which allows us to integrate in a very simple way the two main
causes of international specialisation. We then use this model as a benchmark for quantifying
empirically the relative importance of scale economies and factor proportions in inter-industry trade.
We find that both have a non negligible effect in the manufacturing sectors. In particular, factor
proportions are the main source of international trade in the sectors whose factor intensities are
extreme. On the contrary, increasing returns turn out to be the main determinant of world trade in the
sectors characterised by intermediate factor intensities.
Paolo Epifani is lecturer of International Economics at Università Commerciale L. Bocconi, Milan,
and at Università di Castellanza (VA), Via Eustachi, 30 - 20129 Milano (home).

Pareto Gains from Trade (J.E.L.: F10, F11)
by Giovanni Facchini and Gerald Willmann
no.2, 2001
In this paper we review the literature on Pareto gains from trade. We start by discussing the
distributional implications of trade which arise in the general heterogeneous agents case. We present
the proof of Pareto gains from trade using lump-sum redistribution, followed by the same result with
commodity taxation. Newer results involving non-linear taxation, in particular the special case of a
duty free zone, are also discussed. Finally, we address the distributional effects of trade in the
presence of increasing returns to scale and love of variety.
GIOVANNI FACCHINI is Ph.D. student at the Department of Economics, Stanford University,
Stanford, CA 94305, Usa.
 facchini@leland.Stanford.EDU
GERALD WILLMAN is Ph.D. student at the Department of Economics, Stanford University,
Stanford, CA 94305, Usa.


Concorrenza ed accumulazione ottimale in un modello lineare di produzione (J.E.L…………….)
by Giuseppe Freni

Generalising Greenwald-Stiglitz Framework through Firms‟ Financing Heterogeneity (J.E.L.: E32,
E44, G32)
by Marco Gallegati
In this paper I try to generalise the Greenwald-Stiglitz‟s framework with equity rationing introducing
firms‟ financial heterogeneity as suggested by the hierarchy of finance model. After distinguishing
among firms‟ alternative financing rgimes it is possible to establish both a short run non-neutrality
proposition according to which monetary policy may affect real output through changes of the
expected future price level, and a long run non-neutrality proposition based on the Fisher effect.
Moreover, changes in the degree of financial fragility of the system, proxied by changes in the
proportion of liquidity constrained firms, may determine shifts of the dynamic behaviour of the
MARCO GALLEGATI is researcher in political economy at the University of Ancona, Faculty of
Economics, Department of Economics, Piazzale Martelli 8, 60121 Ancona.

The Effects of Structural Asymmetries in Aggregate Demand on ECB Monetary Policy (J.E.L.: E58,
by Leonardo Gambacorta
no.2, 2001
This paper analyses the effects of structural asymmetries in aggregate demand on the monetary policy
of the ECB utilising a two-country, rational expectations model. The characteristics of the optimal
monetary policy depend on the preferences of the Governing Council‟s members: “national” interests
tend to coincide with those of the area as a whole only if the economies are identical or there is perfect
substitutability among goods. If the countries that make up the union have different financial
structures or different levels of openness to international trade, then the benefits of an active monetary
policy, which responds to information from financial indicators, are very high. In fact, in the presence
of structural asymmetries, the optimal monetary policy is influenced not only by the nature of the
shock but also by its provenience since its propagation within the union depends upon the
characteristics of the country that has been hit by the stochastic shock.
LEONARDO GAMBACORTA is researcher at the Research Department of the Bank of Italy, Via
Nazionale 91, 00184 Rome.

Education and Job Market Signalling:How Robust is the Nexus? (J.E.L.: D30 - D82 - J31 - C72)
by Massimo Giannini
no.2, 2001
In this paper the Signalling approach to the explanation of wage differentials is analysed in a critical
way. Departing from the classic Spence's model, the article shows how the introduction of
inequalities in accessing to education leads to separating equilibria characterised by redistributive
effects among workers and firms, with lower wages for high skill workers respect to the traditional
model. Moreover pooling equilibria can also exist as effect of such inequalities; in this case a unique

wage exists for all types of workers, operating as a redistributive effect from high-skill to low-skill
MASSIMO GIANNINI is researcher in economics at the Università degli Studi di Roma Tor Vergata,
Facoltà di Giurisprudenza, Dipartimento di Diritto e Procedura Civile, Via Orazio Raimondo 18,
00173 Roma.

Istruzione, caratteristiche familiari ed effetti sul reddito in Italia (J.E.L…………….)
by Massimo Giannini
MASSIMO GIANNINI is researcher in economics at the Università degli Studi di Roma Tor Vergata,
Facoltà di Giurisprudenza, Dipartimento di Diritto e Procedura Civile, Via Orazio Raimondo 18,
00173 Roma.

The Encapsulation of Decentralized Information in Network of Firms (J.E.L.: L11, L22)
by Alessandro Innocenti
This paper offers an interpretation of the recent diffusion of the processes of productive outsourcing
founded on two explanatory points. The first is that such processes replace a hierarchical paradigm of
information diffusion with a decentralized paradigm in which independent subcontracting firms
autonomously collect and process part or all of the prominent information. The second is constituted
by the change of the modality of production innovation, becoming the result of autonomously
developed inputs that are successively made complementary by the work of the network through an
encapsulation process of the information. This is made possible by the fact that after an initial phase
in which a new input is jointly projected by the contractor and the subcontractor and in which the
information comes shared, a phase follows in which the prominent information for the specification
of the characteristics of the product and for the solution of the local and unforeseen problems is
collected and processed in a sequential manner and then encapsulated in the input by autonomous
production units. In comparison with the vertical integration (make) or the market (buy), this
structure of governance (subcontract) allows for the organization in more efficient manner of the
processing of the information, for the reduction of the informative costs and for the minimization of
the risk of spillover.
ALESSANDRO INNOCENTI is researcher in economics at the Università degli Studi di Siena,
Facoltà di Economia, Dipartimento di Economia Politica, Piazza S. Francesco7, 53100 Siena.

Fiscal Policy and Inflation Targets: Does Credibility Matter? (J.E.L. E520; E580)
By Marco Lossani, Piergiovanna Natale and Patrizio Tirelli
We reconsider Svensson's inflation-targeting proposal in a model where the need to raise seigniorage
revenues determines the socially optimal inflation rate and distortionary taxes cause the inflation bias.
Interpreting the targets as contracts, we show that the interaction between fiscal and monetary policy
complicates the structure of the optimal contract. Moreover, if the commitment technology is
imperfect, “highish” targets generate lower inflation than targets, which are too low to be credible.
Alternatively, interpreting inflation targets as policy delegation to a non-distortionary
target-conservative agent, we show that target-conservative bankers are public-expenditures
conservative. Unfortunately, only idiosyncratic views about the benefits from public expenditures
can be invoked to justify expenditures-conservatism, implying that target-conservative agents are
also weight-conservative.

Marco Lossani is associate professor of economics at the Università Cattolica del Sacro Cuore di
Milano, Facoltà di Economia e Commercio, L.go Gemelli 1, 20123 Milano.
Piergiovanna Natale is associate professor of economics at the Università degli Studi di
Milano-Bicocca, Facoltà di Economia, Piazza dell‟Ateneo Nuovo 1, 20126 Milano.
Patrizio Tirelli is professor of economics at the Università degli Studi di Milano-Bicocca, Facoltà di
Economia, Piazza dell‟Ateneo Nuovo 1, 20126 Milano.

Raising Rivals‟ Costs with Network Externalities (J.E.L. D42, D43, L13)
by Fabio Maria Manenti
This paper analyses the impact on consumption externalities on firms‟ cost raising strategies. Two
cases are considered: unilateral and reciprocal cost raising strategies. Following Economides (1996a),
we show that the externality may have a pro-competitive role, by inducing the firms to pursue an
accomodating strategy. In addition, we show that when each firm can raise the cost of the rival
(reciprocal cost raising strategies), then the externality, when it is sufficiently strong, acts as a
coordinating mechanism towards a Pareto superior outcome.
FABIO MARIA MANENTI is researcher in economics at the Università degli studi di Padova,
Facoltà di Economia, Dipartimento di Scienze Economiche “M. Fanno”, Via del Santo 33, 35123

Environmental Resources, Prices and Distribution (J.E.L.: O13, O41)
by Fausta Pellizzari
The aim of this work is to analyse the problem of how the environmental resources can be introduced
in the traditional multisectoral linear schemes of production and price-distribution and the
consequences of this introduction on the quantity and price-distribution system. The presence of
environmental resources requires substantial changes both to the quantity system and to the price
system After assuming that in each period of production the environmental resources cannot be fully
reintegrated, otherwise they would become as any other commodity, I examine several possible ways
of accomplishing this reintegration process. One way is to add a new process - the process of
reintegration - in the standard technical matrix. Another way is to take account of the reintegration of
the environmental resources by means of an increase of the technical coefficients, or by means of a
destination to this aim of part of the net product. I discuss these strategies and the resulting changes of
the quantity and price system. In the former case the price system simultaneously determines the price
of the environmental resource as well as the prices of the other commodities. The price of the
environmental resource is the price of the output of the process of reintegration, without any
consideration on scarcity and incomplete reproducibility. In the latter cases, such modifications are
insufficient to determine the price of the environmental resource, which must be determined apart. I
analyse the significance of having a price that, in addition to the cost of the reintegration, includes
also a cost for the scarcity and incomplete reproducibility of the environmental resource -in other
words I introduce the pure environmental rent. This price affects the distribution of income, the
choice of techniques and the degree of conservation of the resources. I discuss these consequences in
the second part of the paper.
FAUSTA PELLIZZARI is associate professor of Development Economics at the Catholic
University, Faculty of Political Science, Cranec (International Centre for Economic Analysis and
Development Research), Largo Gemelli 1, 20123, Milan.

Structural changes in the growth of Italy‟s service sector (J.E.L.: J21, L80, O52)
by Alberto Pompermaier
This paper deals with the growth in the service sector employment of the Italian economy during the
period 1965-1988. The analysis is conducted using the intersectoral approach developed by
Momigliano-Siniscalco (1982). The results show that labour force growth in the tertiary sector was
due mainly to the dynamics of labour productivity and to intermediate demand, with the latter coming
increasingly from the service sector itself. Moreover, employment in the industry sector became more
and more dependent on the final demand for services, which leads to the conclusion that growth in
total employment during the 80s took place mainly within the service subsystem.
ALBERTO POMPERMAIER is MPhil student at the School of Economics, University of
Nottingham, University Park, Nottingham, NG7 2RD, United Kingdom.

Pension System and Human Capital Accumulation: A Theoretic Approach (J.E.L.: H53, H55).
by Nicola Carmine Salerno
no.1, 2001
The work consists of two overlapping generations models of three periods each, one containing a
pay-as-you-go pension system and the other a capitalisation pension system. In the first period agents
don‟t work and have to decide how much to invest in training, borrowing from the generation
working at that time. Training is risky and its result is known in the following period, when the
accumulated human capital becomes productive and enters the production function. In the final third
period agents are retired. Human capital deriving from investments in training follows a simple
stochastic process. The two models are analytically solved in the two endogenous variables: the rate
of growth of investments in human capital and the stock of real capital per unit of efficient work.
What kind of effects can the structure of pensions have on decisions of agents to have or not to have
risky training when young ? Contrarily to commonly accepted theoretical position, many scenarios
come out in which a pay-as-you-go system conducted in financial equilibrium can generate higher
rate of growth, never violating compatibility between incomes belonging to the young and the old
NICOLA CARMINE SALERNO is “dottore di ricerca” in Economia Politica at the Università degli
Studi di Siena, Dipartimento di Scienze Economiche, Piazza San Francesco n.1, 53100 Siena, and
research assistant at the ISAE - Istituto di Studi ed Analisi Economica, Ministero del Tesoro, Piazza
dell‟Indipendenza n.4, 00185 Roma.

On a Class of Preference Relations Equivalent to a Regular Relation (J.E.L.: D11)
by Paolo Scapparone
no.1, 2001
In the context of revealed preference theory, two irreflexive (or strong preference) relations are said
to be (motivationally) equivalent if and only if they generate, by means of the usual process of
constrained maximization, the same demand correspondence. The traditional economic theory is
particularly interested in the case in which among the strong preference relations generating a
demand correspondence there is a regular relation, i.e. a transitive relation whose non-comparability
relation is transitive too. However, the relations which are equivalent to a regular relation are not
necessarily regular. Therefore, the following problem naturally arises: what properties a strong
preference relation must possess in order that among its equivalent relations there is a regular
relation? To this end, it is sufficient to suppose that: a) the separating hyperplane between any
consumption vector and the set of its preferred elements is unique; b) every non-empty and finite set
of consumption vectors is not included in the convex hull of the union of the preferred elements to the
points of the set.

PAOLO SCAPPARONE is professor of political economy at the Università degli Studi di Pisa,
Facoltà di Economia, Via Ridolfi 10, 56100 Pisa

Efficiency of Nonprofit Organisations: Some Preliminary Remarks on Theoretical Issues (J.E.L.:
L31, D23, D64)
by Gilberto Turati
no.1, 2001
This paper proposes a survey of the economic literature about nonprofit organisations (NPO),
addressing two complementary issues. First, it focuses on goods and services produced by NPOs.
Empirical research shows that these organisations are mainly present in the sectors of education,
welfare services and health services. Theoretical research tries to find a common factor that links all
these different activities and distinguishes between altruism and egoism of agents. When agents
behave altruistically and nonmarket transfers (such as donations) prevail, NPO produce ideological
goods and relational goods. When agents behave egoistically and market exchanges prevail, NPO are
mainly active in sectors characterised by strong asymmetric information between producers and
consumers and in sectors in which collective goods are produced. The paper then examines why NPO
seem to be more efficient in producing these goods. On the one hand, in the case of altruistic
behaviour of agents, altruism itself is the key variable to explain the efficiency of NPO relative to
other organisational forms. On the other hand, in the case of egoism, it emerges that NPO are more
trustworthy than other organisations. The trustworthiness stems from the presence of a statutory
non-distribution of profits constraint. However, this constraint “attenuates” property rights and can
generate inefficiencies. The absence of a market for property rights in the nonprofit sector leaves
stakeholders without a mechanism to discipline managers. However, the adoption of an “ethic code”
can solve these problems, inducing managers to invest in reputation.
GILBERTO TURATI is Ph.D. student at Università Cattolica del Sacro Cuore, Facoltà di Scienze
bancarie, finanziarie e assicurative, Istituto di Economia e Finanza, Via Necchi 5, 20123 Milano.

New theories of fiscal policy and the empirical evidence (J.E.L. E62, H62)
by Andrea Zaghini
This paper analyses and discusses the relationship among fiscal contractions, permanent
improvements in public finances and short-run macroeconomic performance. In the last decade, new
theoretical approaches have been proposed from a lively literature and many studies tried to support
theory with a clear empirical evidence. The main idea is that fiscal consolidations that concentrate on
the expenditure side and unfold over a relatively long time span are more likely to succeed in
reducing the public debt ratio than tax-based or shorter adjustments. Furthermore, macroeconomic
consequences are strictly related to fiscal successfulness: only successful contractions do not trigger
economic slowdowns.. The policy implications of this new approach are here discussed and
investigated with respect to the empirical evidence.
ANDREA ZAGHINI is researcher at the Servizio Studi of Banca d‟Italia, Via Nazionale 91, 00184

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