Luisa Giuriato

... historical, social or economic context, with a single illiberal, dangerous face: this deforming lens is today the common key of interpretation of the Arab-Islamic world 1 . ... in and out groups and thereby ground a conflict of interest between the groups. Having a conflict of ...

Fiscal rules have been increasingly invoked to consolidate the public finances of developed economies after the Great Recession. This paper examines the main features of the debt brake and of the expenditure rules adopted by OECD countries and the results ...

We explore the distribution of public–private partnerships (PPPs) among the European Union countries, with a special focus on fiscal rules and budgetary constraints while controlling for empirically identified drivers. While offering the opportunity to increase innovation and efficiency in the public sector infrastructure, PPPs allow governments to relax their budget and borrowing constraints. We find that the state of public finances influences the government’s choice of PPPs and makes them more appealing for reasons other than efficiency. Stringent numerical rules on the budget balance also foster government’s opportunism in the choice of PPPs. On the other hand, high levels of public debt increase the country risk, and discourage private investors from PPP contracts. The results highlight the importance of restoring PPP investment choices based on efficiency criteria and adapt fiscal rules to shield public investment while stabilizing private expectations by means of credible tra...

10 Rationally Violent Tactics: Evidence from Modern Islamic Fundamentalism Luisa Giuriato and Maria Cristina Molinari 1. INTRODUCTION The" clash of civilization" is one of the most recent intellectual ghosts haunting the imagination of Western peoples. The expression has ...

Alessandra Cepparulo* and Luisa Giuriato∗ Abstract Fiscal rules have been increasingly invoked to consolidate the public finances of developed economies after the Great Recession. This paper examines the main features of the debt brake and of the expenditure rules adopted by ...

Public-Private Partnerships (PPPs) are mostly presented as a means to introduce efficient procurement methods and better value for money to taxpayers. However, the complexity of the PPP mechanism, their lack of transparency, accounting rules and implicit liabilities make it often impossible to perceive the amount of public expenditure involved and the long-run impact on taxpayers, providing room for fiscal illusion, i.e., the illusion that PPPs are much less expensive than traditional public investments. This psaper, thanks to a systematic review of the literature on the EU countries experience, tries to unveil the sources of this illusion by looking at the reasons behind the PPPs’ choice, their real costs, and the sources of fiscal risks. The literature suggests that PPPs are more costly than public funding, especially when contingent liabilities are not taken into account, and are employed as mechanisms to circumvent budgetary restrictions and to spend off-balance. The paper concl...

Which are the institutional and constitutional settings that best reduce the tendency to manipulate fiscal forecasts? This paper addresses the question by examining the quality of fiscal forecasts at different stages of the budget process in 13 European Union countries by using annual forecast vintages (1999–2013) from Stability and Convergence Programmes. Both the role of political structures and the balance of power between the executive and the legislature are assessed as determinants of systematic forecasting errors. The findings suggest that the forecasting bias is more effectively countered in presidential and semi/presidential systems, in parliamentary systems with strong bicameralism and when executive/legislature relations are constrained by checks and balances. Confirmation of these results is also provided by linking our approach to the fiscal institutionalist approach based on the form of fiscal governance and the stringency of fiscal rules. In terms of institutional capacity, if fiscal rules and legislative organizational and research capacity counter the executive’s monopoly of fiscal forecasting, strengthening the legislature’s formal powers negatively influences the fiscal forecast accuracy. Indeed, strategic considerations may induce the executive to anticipate the legislature’s amendment or rejection of the tabled budget by means of more favourable economic and fiscal assumptions. The crisis and its urgencies crisis seem to have weakened the effect of institutional executive/legislature relations on fiscal forecast accuracy.

The introduction of expenditure rules in the next future in Italy has beenmade viable by recent domestic and European budget reforms. Expenditure rules could improve the difficult conditions of the Italian public finances and could remedy to some of itsmain flaws, in particular, «unexpected» budgetary slippages and poor expenditure control.The analysis is focused on the comparison of some relevant characteristics of three kinds ofexpenditure rules (a ceiling set in terms of a rate of expenditure growth, a fixed term/rolling basis spending limit and an expenditure ceiling within a debt brake mechanism) and onthe impact that their adoption could have on the soundness of the country's fiscal position.The expenditure counterfactual paths we trace use a real-time data set covering all stagesof the budget process. Political acceptability, coherence with the EU and the domestic fiscalframeworks, predictability of resources and transparency differ according to the ruleadopted and prevent a clear ranking of the expenditure rules to single out the best solution.However, the expenditure ceilings within the debt brake unquestionably grant better resultsin terms of fiscal performance.

In this paper we revisit the impact of global public goods (GPGs) in Official Development Assistance budgets using panel data covering the DAC countries during the period 1973-2009. Our findings reveal a weak crowding-out effect of traditional aid and an increasing financing to weakest-link technology GPGs by rich countries aiming at avoiding sub-optimal levels of provision in strategic sectors. Searching for the determinants of GPG-related aid, we find a significant role played by variables expressing donors’ public finance constraints, openness to the rest of the world and preferences for domestic expenditures

Forecast errors in budgetary variables are frequent. When systematic, they are a source of concern, as they signal misconduct in fiscal policymaking, undermine the government’s credibility and compromise long-term fiscal sustainability. This paper analyses the characteristics of fiscal forecasting and implementation errors in Italy usingreal-timedata over the period 1998–2009. Several empirical methods are applied in order to identify the features of policymakers’ behaviour in preparing and implementing annual fiscal policy and to discover potential determinants in the formation of the implementation errors. Our results show that implemented budgetary plans systematically fall short one year ahead of ambitious planned adjustments for the main public finance aggregates. Fiscal illusion dominates revenue and GDP forecasting, and preliminary data releases are severely biased estimators of the final data, especially for expenditures. The role of the parliamentary session in driving a se...

The paper accounts for the veto player system that dominates the decisions on the medium-term expenditure ceilings (the Financial Perspectives) and on the revenues (the Own Resources Decision) and for the joint decision-making mode that has been gradually introduced for the European Union’s annual budgetary process. This two-tier system has been confirmed by the new Constitutional Treaty, which does not substantially innovate the intergovernmental procedures governing the medium term programming and financing. With respect to the annual budgetary process, the Constitutional Treaty institutionalises the rules which have been necessitated by practical constraints outside the Treaty machinery: the new process is modelled on a modified version of legislative Codecision and provides for incentives to the parties to agree on the budget draft decided by the Conciliation Committee.

The 1999-2006 versions of the Italian Domestic Stability Pact had many shortcomings and a modest impact with respect to the aim of aligning the fiscal behaviour of sub-national government units with the national commitments under the European Stability and Growth Pact. The Domestic Pact was revised in 2007 and 2008 to tighten the monitoring and sanctions framework and prevent some inefficient behaviour. However, some undesirable features still mar the new regime: no coordination exists between the Domestic Pact and the debt and tax constraints applied to local governments; a clear definition of the contribution of sub-national governments to aggregate compliance with the external rule is still lacking; flexibility has been introduced by means of an artificial reference budget balance; side effects on resource redistribution are ignored; and monitoring and sanctioning remain weak. Remedies for the above shortcomings can possibly be found in the domestic pacts of the other EMU countri...

One of the most debated problems of the EU enlargement to the Central and Eastern European countries is the financing of the candidate countries. As they are much poorer and much more agricultural than the present EU members, they will be entitled to major financial transfers from the EU budget. Given the limited size of the EU budget, this will imply to redesign the current EU policies and financial transfers. The paper examines the framework (Agenda 2000 and the Berlin European Council) within which the present pre-accession and accession appropriations have been determined. Remarkable differences can be observed in the financial transfers to the current and future member States: however, given the Agenda 2000 accession hypothesis (first and second wave accessions), the estimated cost of eliminating this unequal treatment would be affordable under the current financial provisions. The recent change in the EU accession negotiation strategy opens the possibility that nearly all the ...

The impact of crime and counterfeiting on Italian trading firms has been rather neglected. Nevertheless, they are important drivers of trade in countries like Italy, whose economic activity is characterized by small/medium-sized firms, highly exposed to the risk of infringement of intellectual property rights by criminal activities of counterfeiting, and, at the same time, not averse to production/exchange of counterfeited goods. We employ a newly-built regional panel data set that includes both economic variables and indicators of counterfeiting activities and criminality during the period of deep economic crisis (2008-2013). Using a dynamic panel data model, we study how counterfeiting affects trade indicators of the Italian firms. We find that commercial exchanges increase when regions are hubs of production or transit points for fakes. The benefit on trade should not hide the consequences of counterfeiting in terms of loss of private investors’ confidence, limits to business i...

We analyse the Public Private Partnerships (PPPs) in order to account for their uneven distribution among the European Union countries and to identify the motivations of the public actor in selecting PPPs. We focus on the fiscal incentives to overcome budget and borrowing constraints, taking also into account of the political features and institutional frameworks of the countries. Using IMF data over the years 1990-2015, we confirm that the state of public finances impacts on the government’s choice of PPPs: financially constrained governments find the PPP option more attractive due to the possibility of off-balance accounting, while high-debt countries reduce the private investors’ interest in PPP. Fiscal rules increased the PPP bias in the pre-crisis period, while the post-crisis reforms and the increased surveillance seem to better discipline PPP employment. PPPs are, also, confirmed to be under the influence of political competition and government’s preferences for current expen...

The European Union fiscal architecture combines hard and soft modes of policy coordination that constitute a complex set of fiscal rules and procedures. Since the crisis, the framework has been heavily unbalanced towards the hard mode creating an increasingly rigid and unwieldy system. Its flaws are rooted in the contradictions of the underlying intergovernmental decision-making regime that was strengthened during the crisis - the «new Union method» - and delivers unsatisfactory compromise decisions that hide important divergences among member states. The collective action problems that follow are dealt with by continuous adjustments and interpretations of the fiscal framework that, however, cannot remedy two main problems of intergovernmentalism: i) the inability to forge an aggregate fiscal policy stance and; ii) the weak legitimacy. If institutions are to grow wiser, they should take stock of the fact that even a more extended or refined architecture cannot remedy to these contra...