Tesi etd-12232020-120103
Link copiato negli appunti
Tipo di tesi
Dottorato
Autore
DE CRISTOFARO, FABIANA
URN
etd-12232020-120103
Titolo
Exercises in comparative economic policy: three papers
Settore scientifico disciplinare
SECS-P/02
Corso di studi
Istituto di Economia - JOINT PHD IN ECONOMICS
Commissione
relatore Prof. TAMAGNI, FEDERICO
Parole chiave
- campital movements
- fiscal policy
- labour market flexibility
- migration
- unemployment
Data inizio appello
16/04/2021;
Disponibilità
completa
Riassunto analitico
This thesis draws inspiration from developments in the debate on economic theory and policy that have taken place over the last dozen years (a debate on this topic is in the special issue edited by Brancaccio and De Cristofaro 2019a). Since the great international recession of 2008, a certain dissatisfaction with the analysis and policy prescriptions typical of the so-called "mainstream" approach seems to have grown in the academic community. The most orthodox versions of the prevailing paradigm have been challenged by more and more studies debating the validity of their assumptions, the robustness of the empirical evidence and the effectiveness of the policy recipes. This tendency to rethink economic theories and policies has emerged both within the mainstream research stream and in the interactions between the mainstream and competing approaches. From the point of view of the concrete economic policy practice of governments and international economic institutions, however, the winds of change seem to have been more contrasted. Although the changes in perspective also on this front have been undeniable, there are those who believe that they have been insufficient in relation to the severity of the crises of recent years. The ultimate reason for this thesis relies, therefore, on the hiatus that seems to exist between the economic policy prescriptions still implemented today and their effectiveness on the empirical ground. This “mainstream policy crisis” is examined here by focusing attention on some inconsistencies which concern labor market regulation, public finance management and liberalization of capital movements. The present work is organized as follows.
In Chapter 1, we will address the issue of employment protection legislation and labor market outcomes (further insight into globalization and convergence in labor conditions is provided in Brancaccio, De Cristofaro and Filomena, 2019). The so-called 'IMF-OECD consensus' suggests that labor market deregulations increase employment and reduce unemployment. This chapter presents a meta-analysis of research on this topic based on MAER-NET guidelines. We examine the relation between Employment Protection Legislation indexes on one hand, and employment and unemployment on the other. Among 53 academic papers published between 1990 and 2019, only 28 per cent support the consensus view, while the remaining 72 per cent report results that are ambiguous (21 per cent) or contrary to the consensus (51 per cent). The decline in support for the consensus view is particularly evident in the last decade, with 88 percent publications which are ambiguous or contrary to the consensus. These results are independent of the citations of papers examined, the impact factor of journals and the techniques used. Finally, a FAT-PET metaregression model confirms these outcomes.
In Chapter 2, we deal with the matter of public debt management (on the same topic see Bancaccio and De Cristofaro, 2019bc). The well-known tests carried out by Blanchard and Leigh (2013; IMF, 2012; further insights are provided in Califano and De Cristofaro, 2018) and Fátas and Summers (2018) are extended in this chapter into a panel framework in order to assess the empirical basis of the so-called IMF "mea culpa" regarding the underestimation of Keynesian multipliers during the euro area crisis (on more general scenarios about Eurozone tightness see Brancaccio, De Cristofaro and Vita, 2020). The objections put forward by the European Central Bank, the European Commission and other authors against the “underestimation” thesis are tested and refuted. The results support the “mea culpa” and highlight that the underestimation of multipliers can concern both the short and the long term.
In Chapter 3, we cope with the issue of international capital flows as opposed to migratory flows. Liberalization policies of international movements of capital and labor have represented a crucial feature of the so-called "globalization" era. More recently, however, several restrictions on migratory movements have been adopted to face the alleged negative effects of immigration. On the contrary, free movement of capital has almost always been preserved. This chapter aims to verify whether this current order of international economic policy can be justified in economic terms. We propose a first direct comparison between the macroeconomic and distributive impacts of "extreme" episodes of net capital outflows and net migrant inflows in OECD countries between 1970 and 2016. Applying a fixed effects approach and an event-study approach, we show that real GDP growth, real GDP percapita and the wage share are not related or, in some cases, even positively related with massive immigration, while they are negatively related with capital flights. These results contrast with current policy agendas and seem to suggest that controls should concern capital movements rather than migratory flows of people.
Although the three works presented in this thesis are dedicated to different topics, a logical and methodological thread holds them together. All these exercises are based on the objective of comparing two different views of economic theory and policy. In the case of the labor market, we tried to assess whether and to what extent the doctrine of flexibility as an improvement factor in employment performance was confirmed in the available analyses. In the case of government budget policy, we verified whether any underestimation of the Keynesian multipliers could have led to endorsement of particularly stringent budget consolidation policies. In the case of international relations, we tried to assess whether the immigration control policies could find more or less empirical justifications compared to alternative capital control policies.
The conceptual and technical effort consisted in trying to identify empirical analysis criteria that would allow us to evaluate which of the different views was more or less in line with the empirical evidence available. Of course, future research will further refine and eventually question these exercises. However, it is interesting to note that the results obtained so far are in contrast with the currently prevailing policy lines, in the fields of labour, public budget and movements of people and capital.
During a lecture given by Olivier Blanchard, I asked him what his opinion was regarding the position of his colleague and publishing companion Jean Tirole, who a few years ago advocated the need to expel all alternative economic research approaches from the academic community. Blanchard replied that he did not share the idea that the mainstream had the right to hold the "monopoly" of knowledge in the economic field. Well, the three exercises presented in this thesis focus precisely on this conception of scientific knowledge: adverse to monopolies and pluralistic.
In Chapter 1, we will address the issue of employment protection legislation and labor market outcomes (further insight into globalization and convergence in labor conditions is provided in Brancaccio, De Cristofaro and Filomena, 2019). The so-called 'IMF-OECD consensus' suggests that labor market deregulations increase employment and reduce unemployment. This chapter presents a meta-analysis of research on this topic based on MAER-NET guidelines. We examine the relation between Employment Protection Legislation indexes on one hand, and employment and unemployment on the other. Among 53 academic papers published between 1990 and 2019, only 28 per cent support the consensus view, while the remaining 72 per cent report results that are ambiguous (21 per cent) or contrary to the consensus (51 per cent). The decline in support for the consensus view is particularly evident in the last decade, with 88 percent publications which are ambiguous or contrary to the consensus. These results are independent of the citations of papers examined, the impact factor of journals and the techniques used. Finally, a FAT-PET metaregression model confirms these outcomes.
In Chapter 2, we deal with the matter of public debt management (on the same topic see Bancaccio and De Cristofaro, 2019bc). The well-known tests carried out by Blanchard and Leigh (2013; IMF, 2012; further insights are provided in Califano and De Cristofaro, 2018) and Fátas and Summers (2018) are extended in this chapter into a panel framework in order to assess the empirical basis of the so-called IMF "mea culpa" regarding the underestimation of Keynesian multipliers during the euro area crisis (on more general scenarios about Eurozone tightness see Brancaccio, De Cristofaro and Vita, 2020). The objections put forward by the European Central Bank, the European Commission and other authors against the “underestimation” thesis are tested and refuted. The results support the “mea culpa” and highlight that the underestimation of multipliers can concern both the short and the long term.
In Chapter 3, we cope with the issue of international capital flows as opposed to migratory flows. Liberalization policies of international movements of capital and labor have represented a crucial feature of the so-called "globalization" era. More recently, however, several restrictions on migratory movements have been adopted to face the alleged negative effects of immigration. On the contrary, free movement of capital has almost always been preserved. This chapter aims to verify whether this current order of international economic policy can be justified in economic terms. We propose a first direct comparison between the macroeconomic and distributive impacts of "extreme" episodes of net capital outflows and net migrant inflows in OECD countries between 1970 and 2016. Applying a fixed effects approach and an event-study approach, we show that real GDP growth, real GDP percapita and the wage share are not related or, in some cases, even positively related with massive immigration, while they are negatively related with capital flights. These results contrast with current policy agendas and seem to suggest that controls should concern capital movements rather than migratory flows of people.
Although the three works presented in this thesis are dedicated to different topics, a logical and methodological thread holds them together. All these exercises are based on the objective of comparing two different views of economic theory and policy. In the case of the labor market, we tried to assess whether and to what extent the doctrine of flexibility as an improvement factor in employment performance was confirmed in the available analyses. In the case of government budget policy, we verified whether any underestimation of the Keynesian multipliers could have led to endorsement of particularly stringent budget consolidation policies. In the case of international relations, we tried to assess whether the immigration control policies could find more or less empirical justifications compared to alternative capital control policies.
The conceptual and technical effort consisted in trying to identify empirical analysis criteria that would allow us to evaluate which of the different views was more or less in line with the empirical evidence available. Of course, future research will further refine and eventually question these exercises. However, it is interesting to note that the results obtained so far are in contrast with the currently prevailing policy lines, in the fields of labour, public budget and movements of people and capital.
During a lecture given by Olivier Blanchard, I asked him what his opinion was regarding the position of his colleague and publishing companion Jean Tirole, who a few years ago advocated the need to expel all alternative economic research approaches from the academic community. Blanchard replied that he did not share the idea that the mainstream had the right to hold the "monopoly" of knowledge in the economic field. Well, the three exercises presented in this thesis focus precisely on this conception of scientific knowledge: adverse to monopolies and pluralistic.
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