Micro and Macro essays in Applied Fiscal Policy

This thesis analysis micro and macro aspect of applied fiscal policy issues. The first chapter investigates the extent to which local budget spending composition reacts to fiscal rules variations. I consider the budget of Italian municipalities and exploit specific changes in the Domestic Stability Pact’s rules, to perform a difference-in-discontinuities analysis. The results show that imposing a cap on the total amount of consumption and investment is not as binding as two caps, one for consumption and a different one for investment. More specifically, consumption is triggered by changes in wages and services spending, while investment relies on infrastructure movements. In addition, there is evidence that when an increase in investment is achieved, there is also a higher budget deficit level. The second chapter intends to analyze the extent to which fiscal policy shocks are able to affect macrovariables during business cycle fluctuations, differentiating among three intervention channels: public taxation, consumption and investment. The econometric methodology implemented is a Panel Vector Autoregressive model with a structural characterization. The results show that fiscal shocks have different multipliers in relation to expansion or contraction periods: output does not react during good times while there are significant effects in bad ones. The third chapter evaluates the effects of fiscal policy announcements by the Italian government on the long-term sovereign bond spread of Italy relative to Germany. After collecting data on relevant fiscal policy announcements, we perform an econometric comparative analysis between the three cabinets that followed one another during the period 2009-2013. The results suggest that only fiscal policy announcements made by members of Monti’s cabinet have been effective in influencing significantly the Italian spread in the expected direction, revealing a remarkable credibility gap between Berlusconi’s and Letta’s governments with respect to Monti’s administration.

EXAM-S: an Analysis tool for Multi-Domain Policy Sets

As distributed collaborative applications and architectures are adopting policy based management for tasks such as access control, network security and data privacy, the management and consolidation of a large number of policies is becoming a crucial component of such policy based systems. In large-scale distributed collaborative applications like web services, there is the need of analyzing policy interactions and integrating policies. In this thesis, we propose and implement EXAM-S, a comprehensive environment for policy analysis and management, which can be used to perform a variety of functions such as policy property analyses, policy similarity analysis, policy integration etc. As part of this environment, we have proposed and implemented new techniques for the analysis of policies that rely on a deep study of state of the art techniques. Moreover, we propose an approach for solving heterogeneity problems that usually arise when considering the analysis of policies belonging to different domains. Our work focuses on analysis of access control policies written in the dialect of XACML (Extensible Access Control Markup Language). We consider XACML policies because XACML is a rich language which can represent many policies of interest to real world applications and is gaining widespread adoption in the industry.

Fiscal Constitutions: An Empirical Approach

The overarching question of this dissertation is: “why does the public debt grow, and why are fiscal (debt) crises repetitive and so widespread?” A special focus in answering this question is given to a fiscal constitution, which contains a country-specific set of laws, rules and regulations, and guides decision making in the area of fiscal policy. By shaping incentives and limiting arbitrariness, the fiscal constitution determines the course of fiscal policy and fiscal outcomes in the long term. This dissertation does not give, however, an exhaustive response to the overarching question. Instead it asks much narrower questions, which are selected after reviewing and identifying the main weaknesses and gaps in the modern literature on fiscal constitutions.