This paper proposes a stylized two‐period, two‐country model illustrating the role of distribution of domestic wealth in determining a country's level of access to international lending. We model sovereign debt redemption policy in a common agency framework. Within this framework, policy is the outcome of the interaction between government and local and foreign interest groups with conflicting preferences on debt repayment. Our main result is that in full lobby competition, when all interests are represented, the only equilibrium solution is repudiation and the consequent inability of government to access international capital markets. Conversely, when the ability to lobby depends on wealth, governments can access international credit up to a given maximum external debt capacity, determined by the skew in the distribution of domestic wealth.
The paper offers a new estimate of the sensitivity of Italy's primary budget balance to macroeconomic variables. The analysis has distinguishing features: detailed itemization of public finance aggregates; close attention to the statistical properties of the time series; and joint estimation of elasticities with respect to both real GDP and inflation. First, the economic variables driving the automatic component were chosen. Second, when possible, a macroeconomic base was associated with each public finance item. Third, each tax base was regressed on the driving economic variables. Fourth, each budget item that was supposed to include an automatic component was regressed either on its own base or directly on the economic variables affecting the automatic components. The effects on public budget are simulated to investigate the consequences of a change in nominal and real GDP.
We model a two-party representative democracy with citizen-candidate in which the leader is elected while the central-banker is appointed by the leader. Assuming that fiscal policy is 'more important' than monetary policy, we show that, if some individuals who dislike inflation get organized in a lobby and offer campaign contribution to the party that proposes a zero-inflation policy, then even if the majority of the population, as well as the majority of party-members, favour inflation, no inflation results in equilibrium. The paper provides a political economy explanation of the role played by financial interest groups in providing political support to anti-inflationary monetary policy. Copyright (C) 2004 John Wiley Sons, Ltd
We developed an innovative method to break down official population forecasts by educational level. The mortality rates of the high education group and low education group were projected using an iterative procedure, whose starting point was the life tables by education level for Italy, based on the year 2012. We provide a set of different scenarios on the convergence/divergence of the mortality differential between the high and low education groups. In each scenario, the demographic size and the life expectancy of the two sub-groups were projected annually over the period 2018–2065. We compared the life expectancy paths in the whole population and in the sub-groups. We found that in all of our projections, population life expectancy converges to the life expectancy of the high education group. We call this feature of our outcomes the “composition effect”, and we show how highly persistent it is, even in scenarios where the mortality differential between social groups is assumed to decrease over time. In a midway scenario, where the mortality differential is assumed to follow an intermediate path between complete disappearance in year 2065 and stability at the 2012 level, and in all the scenarios with a milder convergence hypothesis, our “composition effect” prevails over the effect of convergence for men and women. For instance, assuming stability in the mortality differential, we estimated a life expectancy increase at age 65 of 2.9 and 2.6 years for men, and 3.2 and 3.1 for women, in the low and high education groups, respectively, over the whole projection period. Over the same period, Italian official projections estimate an increase of 3.7 years in life expectancy at age 65 for the whole population. Our results have relevant implications for retirement and ageing policies, in particular for those European countries that have linked statutory retirement age to variations in population life expectancies. In all the scenarios where the composition effect is not offset by a strong convergence of mortality differentials, we show that the statutory retirement age increases faster than the group-specific life expectancies, and this finding implies that the expected time spent in retirement will shrink for the whole population. This potential future outcome seems to be an unintended consequence of the indexation rule.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.