Essays on the political economy of European integration

Recently, a rising interest in political and economic integration/disintegration issues has been developed in the political economy field. This growing strand of literature partly draws on traditional issues of fiscal federalism and optimum public good provision and focuses on a trade-off between the benefits of centralization, arising from economies of scale or externalities, and the costs of harmonizing policies as a consequence of the increased heterogeneity of individual preferences in an international union or in a country composed of at least two regions. This thesis stems from this strand of literature and aims to shed some light on two highly relevant aspects of the political economy of European integration. The first concerns the role of public opinion in the integration process; more precisely, how economic benefits and costs of integration shape citizens' support for European Union (EU) membership. The second is the allocation of policy competences among different levels of government: European, national and regional. Chapter 1 introduces the topics developed in this thesis by reviewing the main recent theoretical developments in the political economy analysis of integration processes. It is structured as follows. First, it briefly surveys a few relevant articles on economic theories of integration and disintegration processes (Alesina and Spolaore 1997, Bolton and Roland 1997, Alesina et al. 2000, Casella and Feinstein 2002) and discusses their relevance for the study of the impact of economic benefits and costs on public opinion attitude towards the EU. Subsequently, it explores the links existing between such political economy literature and theories of fiscal federalism, especially with regard to normative considerations concerning the optimal allocation of competences in a union. Chapter 2 firstly proposes a model of citizens’ support for membership of international unions, with explicit reference to the EU; subsequently it tests the model on a panel of EU countries. What are the factors that influence public opinion support for the European Union (EU)? In international relations theory, the idea that citizens' support for the EU depends on material benefits deriving from integration, i.e. whether European integration makes individuals economically better off (utilitarian support), has been common since the 1970s, but has never been the subject of a formal treatment (Hix 2005). A small number of studies in the 1990s have investigated econometrically the link between national economic performance and mass support for European integration (Eichenberg and Dalton 1993; Anderson and Kalthenthaler 1996), but only making informal assumptions. The main aim of Chapter 2 is thus to propose and test our model with a view to providing a more complete and theoretically grounded picture of public support for the EU. Following theories of utilitarian support, we assume that citizens are in favour of membership if they receive economic benefits from it. To develop this idea, we propose a simple political economic model drawing on the recent economic literature on integration and disintegration processes. The basic element is the existence of a trade-off between the benefits of centralisation and the costs of harmonising policies in presence of heterogeneous preferences among countries. The approach we follow is that of the recent literature on the political economy of international unions and the unification or break-up of nations (Bolton and Roland 1997, Alesina and Wacziarg 1999, Alesina et al. 2001, 2005a, to mention only the relevant). The general perspective is that unification provides returns to scale in the provision of public goods, but reduces each member state’s ability to determine its most favoured bundle of public goods. In the simple model presented in Chapter 2, support for membership of the union is increasing in the union’s average income and in the loss of efficiency stemming from being outside the union, and decreasing in a country’s average income, while increasing heterogeneity of preferences among countries points to a reduced scope of the union. Afterwards we empirically test the model with data on the EU; more precisely, we perform an econometric analysis employing a panel of member countries over time. The second part of Chapter 2 thus tries to answer the following question: does public opinion support for the EU really depend on economic factors? The findings are broadly consistent with our theoretical expectations: the conditions of the national economy, differences in income among member states and heterogeneity of preferences shape citizens’ attitude towards their country’s membership of the EU. Consequently, this analysis offers some interesting policy implications for the present debate about ratification of the European Constitution and, more generally, about how the EU could act in order to gain more support from the European public. Citizens in many member states are called to express their opinion in national referenda, which may well end up in rejection of the Constitution, as recently happened in France and the Netherlands, triggering a European-wide political crisis. These events show that nowadays understanding public attitude towards the EU is not only of academic interest, but has a strong relevance for policy-making too. Chapter 3 empirically investigates the link between European integration and regional autonomy in Italy. Over the last few decades, the double tendency towards supranationalism and regional autonomy, which has characterised some European States, has taken a very interesting form in this country, because Italy, besides being one of the founding members of the EU, also implemented a process of decentralisation during the 1970s, further strengthened by a constitutional reform in 2001. Moreover, the issue of the allocation of competences among the EU, the Member States and the regions is now especially topical. The process leading to the drafting of European Constitution (even if then it has not come into force) has attracted much attention from a constitutional political economy perspective both on a normative and positive point of view (Breuss and Eller 2004, Mueller 2005). The Italian parliament has recently passed a new thorough constitutional reform, still to be approved by citizens in a referendum, which includes, among other things, the so called “devolution”, i.e. granting the regions exclusive competence in public health care, education and local police. Following and extending the methodology proposed in a recent influential article by Alesina et al. (2005b), which only concentrated on the EU activity (treaties, legislation, and European Court of Justice’s rulings), we develop a set of quantitative indicators measuring the intensity of the legislative activity of the Italian State, the EU and the Italian regions from 1973 to 2005 in a large number of policy categories. By doing so, we seek to answer the following broad questions. Are European and regional legislations substitutes for state laws? To what extent are the competences attributed by the European treaties or the Italian Constitution actually exerted in the various policy areas? Is their exertion consistent with the normative recommendations from the economic literature about their optimum allocation among different levels of government? The main results show that, first, there seems to be a certain substitutability between EU and national legislations (even if not a very strong one), but not between regional and national ones. Second, the EU concentrates its legislative activity mainly in international trade and agriculture, whilst social policy is where the regions and the State (which is also the main actor in foreign policy) are more active. Third, at least two levels of government (in some cases all of them) are significantly involved in the legislative activity in many sectors, even where the rationale for that is, at best, very questionable, indicating that they actually share a larger number of policy tasks than that suggested by the economic theory. It appears therefore that an excessive number of competences are actually shared among different levels of government. From an economic perspective, it may well be recommended that some competences be shared, but only when the balance between scale or spillover effects and heterogeneity of preferences suggests so. When, on the contrary, too many levels of government are involved in a certain policy area, the distinction between their different responsibilities easily becomes unnecessarily blurred. This may not only leads to a slower and inefficient policy-making process, but also risks to make it too complicate to understand for citizens, who, on the contrary, should be able to know who is really responsible for a certain policy when they vote in national,local or European elections or in referenda on national or European constitutional issues.

Econometric models of financial risks

The goal of this dissertation is to use statistical tools to analyze specific financial risks that have played dominant roles in the US financial crisis of 2008-2009. The first risk relates to the level of aggregate stress in the financial markets. I estimate the impact of financial stress on economic activity and monetary policy using structural VAR analysis. The second set of risks concerns the US housing market. There are in fact two prominent risks associated with a US mortgage, as borrowers can both prepay or default on a mortgage. I test the existence of unobservable heterogeneity in the borrower's decision to default or prepay on his mortgage by estimating a multinomial logit model with borrower-specific random coefficients.

Strategies and procedures for the development of intermodal freight transport in Europe: the role of motorways of the sea services and railway terminals

Since the birth of the European Union on 1957, the development of a single market through the integration of national freight transport networks has been one of the most important points in the European Union agenda. Increasingly congested motorways, rising oil prices and concerns about environment and climate change require the optimization of transport systems and transport processes. The best solution should be the intermodal transport, in which the most efficient transport options are used for the different legs of transport. This thesis examines the problem of defining innovative strategies and procedures for the sustainable development of intermodal freight transport in Europe. In particular, the role of maritime transport and railway transport in the intermodal chain are examined in depth, as these modes are recognized to be environmentally friendly and energy efficient. Maritime transport is the only mode that has kept pace with the fast growth in road transport, but it is necessary to promote the full exploitation of it by involving short sea shipping as an integrated service in the intermodal door-to-door supply chain and by improving port accessibility. The role of Motorways of the Sea services as part of the Trans-European Transport Network is is taken into account: a picture of the European policy and a state of the art of the Italian Motorways of the Sea system are reported. Afterwards, the focus shifts from line to node problems: the role of intermodal railway terminals in the transport chain is discussed. In particular, the last mile process is taken into account, as it is crucial in order to exploit the full capacity of an intermodal terminal. The difference between the present last mile planning models of Bologna Interporto and Verona Quadrante Europa is described and discussed. Finally, a new approach to railway intermodal terminal planning and management is introduced, by describing the case of "Terminal Gate" at Verona Quadrante Europa. Some proposals to favour the integrate management of "Terminal Gate" and the allocation of its capacity are drawn up.

Hybrid Methods for Resource Allocation and Scheduling Problems in Deterministic and Stochastic Environments

This work presents exact, hybrid algorithms for mixed resource Allocation and Scheduling problems; in general terms, those consist into assigning over time finite capacity resources to a set of precedence connected activities. The proposed methods have broad applicability, but are mainly motivated by applications in the field of Embedded System Design. In particular, high-performance embedded computing recently witnessed the shift from single CPU platforms with application-specific accelerators to programmable Multi Processor Systems-on-Chip (MPSoCs). Those allow higher flexibility, real time performance and low energy consumption, but the programmer must be able to effectively exploit the platform parallelism. This raises interest in the development of algorithmic techniques to be embedded in CAD tools; in particular, given a specific application and platform, the objective if to perform optimal allocation of hardware resources and to compute an execution schedule. On this regard, since embedded systems tend to run the same set of applications for their entire lifetime, off-line, exact optimization approaches are particularly appealing. Quite surprisingly, the use of exact algorithms has not been well investigated so far; this is in part motivated by the complexity of integrated allocation and scheduling, setting tough challenges for ``pure'' combinatorial methods. The use of hybrid CP/OR approaches presents the opportunity to exploit mutual advantages of different methods, while compensating for their weaknesses. In this work, we consider in first instance an Allocation and Scheduling problem over the Cell BE processor by Sony, IBM and Toshiba; we propose three different solution methods, leveraging decomposition, cut generation and heuristic guided search. Next, we face Allocation and Scheduling of so-called Conditional Task Graphs, explicitly accounting for branches with outcome not known at design time; we extend the CP scheduling framework to effectively deal with the introduced stochastic elements. Finally, we address Allocation and Scheduling with uncertain, bounded execution times, via conflict based tree search; we introduce a simple and flexible time model to take into account duration variability and provide an efficient conflict detection method. The proposed approaches achieve good results on practical size problem, thus demonstrating the use of exact approaches for system design is feasible. Furthermore, the developed techniques bring significant contributions to combinatorial optimization methods.

Definition, realization and evaluation of a software reference architecture for use in space applications

A recent initiative of the European Space Agency (ESA) aims at the definition and adoption of a software reference architecture for use in on-board software of future space missions. Our PhD project placed in the context of that effort. At the outset of our work we gathered all the industrial needs relevant to ESA and all the main European space stakeholders and we were able to consolidate a set of technical high-level requirements for the fulfillment of them. The conclusion we reached from that phase confirmed that the adoption of a software reference architecture was indeed the best solution for the fulfillment of the high-level requirements. The software reference architecture we set on building rests on four constituents: (i) a component model, to design the software as a composition of individually verifiable and reusable software units; (ii) a computational model, to ensure that the architectural description of the software is statically analyzable; (iii) a programming model, to ensure that the implementation of the design entities conforms with the semantics, the assumptions and the constraints of the computational model; (iv) a conforming execution platform, to actively preserve at run time the properties asserted by static analysis. The nature, feasibility and fitness of constituents (ii), (iii) and (iv), were already proved by the author in an international project that preceded the commencement of the PhD work. The core of the PhD project was therefore centered on the design and prototype implementation of constituent (i), a component model. Our proposed component model is centered on: (i) rigorous separation of concerns, achieved with the support for design views and by careful allocation of concerns to the dedicated software entities; (ii) the support for specification and model-based analysis of extra-functional properties; (iii) the inclusion space-specific concerns.

A farm-level programming model to compare the atmospheric impact of conventional and organic farming

A model is developed to represent the activity of a farm using the method of linear programming. Two are the main components of the model, the balance of soil fertility and the livestock nutrition. According to the first, the farm is supposed to have a total requirement of nitrogen, which is to be accomplished either through internal sources (manure) or through external sources (fertilisers). The second component describes the animal husbandry as having a nutritional requirement which must be satisfied through the internal production of arable crops or the acquisition of feed from the market. The farmer is supposed to maximise total net income from the agricultural and the zoo-technical activities by choosing one rotation among those available for climate and acclivity. The perspective of the analysis is one of a short period: the structure of the farm is supposed to be fixed without possibility to change the allocation of permanent crops and the amount of animal husbandry. The model is integrated with an environmental module that describes the role of the farm within the carbon-nitrogen cycle. On the one hand the farm allows storing carbon through the photosynthesis of the plants and the accumulation of carbon in the soil; on the other some activities of the farm emit greenhouse gases into the atmosphere. The model is tested for some representative farms of the Emilia-Romagna region, showing to be capable to give different results for conventional and organic farming and providing first results concerning the different atmospheric impact. Relevant data about the representative farms and the feasible rotations are extracted from the FADN database, with an integration of the coefficients from the literature.

Effects of 2013 Cap reform on land market: regionalized farm payments and changes in farmers’ intended behaviour

The CAP reform process has been a central issue for agricultural economics research in recent years, and is gaining further attention in view of the post-2013 perspectives (Viaggi et al., 2010; Bartolini et al., 2011). Today the CAP is in the middle of a new reform process. Through the debate generated by the official proposals, published in October 2011 (COM(2011)625/3), the European Union (EU) engaged in a revision of the CAP ended on 26 June 2013 when a political agreement has been reached (IP/13/613, MEMO-13-621 and IP/13/864). In particular, in Italy the switch of the payment regime from historical to regional bases will take place. The underlying assumption is that the shift to regionalized payments changes the remuneration of inputs and has an impact on farmers’ allocation of fixed resources. In this context, farmers are expected to adjust their plans to the new policy environment as the regionalization of support is meant to create a change in incentives faced by farmers. The objective of this thesis is to provide an ex-ante analysis of the potential impact of the introduction of regionalized payments, within the post-2013 CAP reform, on the land market. Regionalized payments seem to produce differentiated effects and contribute to a general (slight) increase of land exchanges. The individual reaction to the new payments introduction would be different depending on location and specialization. These effects seem to be also strongly influenced by the difference in historical payments endowment and value, i.e. by the previous historical system of distribution of payments.