Speaker: Decio Coviello & Andrea Mattozzi, HEC Montreal & European University Institute
- Decio Coviello: "Direct Propagation of a Fiscal Shock: Evidence from Italy’s Stability Pact" (joint with I. Marino, T. Nannicini, and N. Persico)
Abstract: This paper documents: the channels through which local governments propagate a fiscal shock; and the corresponding reaction by firms in the affected upstream sector (municipal procurement). The shock is provided by an Italian fiscal rule, called Patto di stabilita’ dei comuni, which was tightened unexpectedly in 2008 and applied only to municipalities with population greater than 5,000. Using a differencein-difference identification strategy, we estimate that this shock led to a 13-20% reduction of infrastructure spending in treated municipalities, or equivalently, an 80% reduction in the average municipality
- Andrea Mattozzi: “Voter Turnout with Peer Punishment” (joint with D. K. Levine)
Abstract: We introduce a model of turnout where social norms, strategically chosen by competing political parties, determine voters’ participation. When the cost of enforcement of social norms is low, the larger party is always advantaged. Otherwise, in the spirit of Olson (1965), the smaller party may be advantaged. Party advantage depends on the convexity of the function describing the cost to the party of choosing an incentive compatible social norm. Our model shares features of the “ethical” voter model in large elections and of the pivotal voter model in small elections, and it delivers novel and empirically relevant comparative statics results.