Commitment of Monetary Policy with Uncertain Central Bank Preferences

In this paper we analyse the equilibrium degree of commitment in monetary policy to an independent central banker whose preferences are imperfectly observed by private agents. We characterize the incentive compatible strategies by a central bank in office for two periods with no restrictions on its type space. The equilibrium level of commitment is also characterized. We show that when incentive compatibility constraints are binding for a non trivial subset of types of central banks the equilibrium level of commitment involves bunching: different types of rational governments commit monetary policy to similar institutions.monetary policy, delegation, signalling games.

Political Intergenerational Risk Sharing

TIn a stochastic two-period OLG model, featuring an aggregate shock to the economy, ex-ante optimality requires intergenerational risk sharing. We compare the level of time-consistent intergenerational risk sharing chosen by a benevolent government and by an office-seeking politician. In our political system, the transfer of resources across generations is determined as a Markov equilibrium of a probabilistic voting game. Low realized returns on the risky asset induce politicians to compensate the old through a PAYG system. This political system typically generates an intergenerational risk sharing scheme that is (i) larger, (ii) more persistent, and (iii) less responsive to the realization of the shock than the (time consistent) social optimum. This is because the current politician anticipates her transfers to the elderly to be compensated by future politicians through offsetting transfers, and hence overspends. Aging increases the optimal transfer, but surprisingly makes office-seeking politicians more conservative, by increasing the cost for future politicians to compensate the current young.Pension Systems, Markov equilibria, social optimum

Three-types models of multidimensional screening

This paper analyzes the variety of optimal screening contracts in a relatively simple multidimensional framework a` la Armstrong and Rochet (1999), when only three types of agents are present. It is shown, among other things, that the well known principle in optimal contract theory of `no distortion at the top' does not carry over to the multidimensional caseAsymmmetric information; multidimensional screening; optimal contract

Environmental policy as a multi-task principal-agent problem

We use a multi-task principal-agent model with moral hazard to study environmental regulation of a private agent by an EPA that can also allocate its budget to an alternative project with environmental benefits. In a first possible optimum, the EPA imposes a flat fine that exhausts the agent's participation constraint. In the second, the EPA provides the harshest possible punishment for a "poor" observed environmental performance and the highest possible reward for a "good" observed environmental performance. Increases in the available budget and in the maximally allowed penalty have then an ambiguous e_ect on total environmental quality.environmental regulation, multi-tasking

MUSEO E IDENTITA SOCIALE

Perché gli italiani fruiscono poco il patrimonio culturale in cui sono immersi? Perché i musei non sono “accattivanti” per la maggior parte di noi? Le opere d’arte ovunque disseminate nel nostro Paese possono essere concepite in modo nuovo: non più solo oggetti estetici, ma anche elementi che sintetizzano la storia, l’economia, la psicologia, la società di cui sono espressione. L’idea che anima questo libro nasce dall’esigenza di «non fare l’arte popolare, ma rendere il popolo artistico» – come sosteneva Oscar Wilde – così da poter avvicinare chiunque alle opere d’arte. Il risultato di questa ricerca sulla didattica museale in Italia e sulla mediazione culturale in Europa si esprime in due progetti di nuovi percorsi museali: emblematicamente sono state scelte la Galleria Borghese, rivisitata con un itinerario psicologico, simbolico, religioso; e la Galleria Nazionale d’Arte Moderna, ripensata con itinerari che mettono in evidenza gli stili di vita degli italiani, i grandi eventi che hanno caratterizzato le tappe dell’Unità, i personaggi che hanno determinato la storia e le trasformazioni della condizione infantile. - See more at: http://www.lelettere.it/site/e_Product.asp?IdCategoria=&TS02_ID=1717#sthash.cDjiDSch.dpu

Credibility and Commitment of Monetary Policy in Open Economies

In this paper we study the delegation of monetary policy to independent central bankers in a two country world with monetary spill-overs. The paper shows that under imperfect commitment and private information of the Central Bankers about their objectives the optimal degree of commitment depends on the correlation structure of the shock hitting the economies. When the correlation of the shocks across countries is negative, as when the variance to output depends mainly on shocks to the terms of trade, there exist strategic complementarity in the optimal degree of commitment. When the correlation of shocks is positive (common technological or demand shocks) there exist strategic substitutability. These result may provide rationale for the simultaneous increasing attention to the institutional solution to the credibility problem in monetary policy in most advanced countries in the last decades.monetary policy delegation, central bankers, private information, strategic interaction

A Semantic Similarity Measure for Expressive Description Logics

A totally semantic measure is presented which is able to calculate a similarity value between concept descriptions and also between concept description and individual or between individuals expressed in an expressive description logic. It is applicable on symbolic descriptions although it uses a numeric approach for the calculus. Considering that Description Logics stand as the theoretic framework for the ontological knowledge representation and reasoning, the proposed measure can be effectively used for agglomerative and divisional clustering task applied to the semantic web domain.Comment: 13 pages, Appeared at CILC 2005, Convegno Italiano di Logica Computazionale also available at http://www.disp.uniroma2.it/CILC2005/downloads/papers/15.dAmato_CILC05.pd

Corruption and Tax Evasion with Competitive Bribes

In this paper we consider a simple economy where self interested taxpayers may have incentives to evade taxes and to escape sanctions, by bribing public officials in charge for tax collection. The level of monitoring and the level of corruption are endogenously determined assuming that the price for corruption (bribe) sets at a value where expected rents in the public sector are completely dissipated in monitoring costs due to competition among public officials. In the proposed framework, larger fines for evasion will increase tax compliance with ambiguous effects on corruption while larger fine for corruption reduce corruption at the cost of reducing tax compliance. Interestingly, a utilitarian legislator will want to set maximal penalties. Intuitively, preventing corruption through fines is valuable to the planner since it reduces the amount of rent dissipation in the public sector at the cost of decreasing deterrence for the underlying offence (evasion). Finally the shadow value of deterrence is such that the level of public good provided in the economy is smaller than its first best.

Water distribution in the hypothermic dog

Thesis (M.A.)--Boston Universit

Competitive Pressure, Incentives and Managerial Rewards

The paper examines the equilibrium relationship between managerial incentives and product market competition in imperfectly competitive industries. In a simple managerial economy, where owners simultaneously choose reward schemes and managers are privately informed on firms. production technologies, it is showed that a competing-contracts effect, at play under high powered incentive schemes (contracts based on firms’ profits), may induce competitive pressure to elicit managerial effort. An inverted-U shaped relationship between product market competition, managerial effort and agency costs thus obtains when contracts are based on firms’ profits. Remarkably, whenever competition is strong enough, low powered incentive schemes (contracts based on production costs) may survive in equilibrium with detrimental effects on welfare.competing contracts, cost-target, managerial .rms, pro.t-target, product market competition, vertical hierarchies, X-inefficiency