Thesis advisor: Fabio Schiantarelli / Thesis advisor: James Anderson / The thesis is composed of the following three distinct papers. 1.Banks and Development: Jewish Communities in the Italian Renaissance and Current Economic Performance Do banks affect long-term economic performance? I answer this question by relying on an historical development that occurred in Italian cities during the 15th century. A sudden change in the Catholic doctrine had driven the Jews toward money lending. Cities that were hosting Jewish communities developed complex banking institutions for two reasons: first, the Jews were the only people in Italy allowed to lend for a profit; second the Franciscan reaction to Jewish usury led to the creation of charity lending institutions that evolved into many of the current Italian banks. Using Jewish demography in 1450 as an instrument, I estimate large effects of current banking development on the income-per-capita of Italian cities. Additional firm-level analyses suggest that well-functioning local banks exert large effects on aggregate productivity by reallocating resources toward more efficient firms. Controlling for province effects, using additional historical data on Jewish demography and exploiting the expulsion of the Jews from the Spanish territories in Italy in 1541, I argue that my results are not driven by omitted institutional, cultural and geographical characteristics. In particular, I show that the difference in current income between cities that hosted Jewish communities and cities that did not exists only in those regions that were not Spanish territories in the 16th century. These difference-in-difference estimates suggest that the Jewish Diaspora can explain at least 10% of the current income gap between Northern and Southern Italy. 2. Contract Incompleteness, Globalization and Vertical Structure: an Empirical Analysis This paper studies the effects of international openness and contracting institutions on vertical integration. It first derives a number of predictions regarding the interactions between trade barriers, contracting costs, technology intensity, and the extent of vertical integration from a simple model with incomplete contracts. Then it investigates these predictions using a new dataset of over 14000 firms from 45 developing countries. Consistent with theory, the effect of technology intensity of domestic producers on their likelihood to vertically integrate is decreasing in the quality of domestic contracting institutions and in international openness. Contract enforcing costs are particularly high in developing countries and their effects on the vertical structure of technological intensive firms may have significant welfare costs. If improving domestic contracting institutions is not feasible an equivalent solution is to increase openness to international trade. This would discipline domestic suppliers reducing the need for vertical integration. 3. Productivity, Welfare and Reallocation: Theory and Firm-Level Evidence (joint with Susanto Basu, Fabio Schiantarelli and Luis Serven) We prove that in a closed economy without distortionary taxation, the welfare of a representative consumer is summarized to a first order by the current and expected future values of the Solow productivity residual in level and by the initial endowment of capital. The equivalence holds if the representative household maximizes utility while taking prices parametrically. This result justifies TFP as the right summary measure of welfare (even in situations where it does not properly measure technology) and makes it possible to calculate the contributions of disaggregated units (industries or firms) to aggregate welfare using readily available TFP data. We show how these results must be modified if the economy is open or if taxes are distortionary. We then compute firm and industry contributions to welfare for a set of European OECD countries (Belgium, France, Great Britain, Italy, Spain), using industry-level (EU-KLEMS) and firm-level (Amadeus) data. After adding further assumptions about technology and market structure (firms minimize costs and face common factor prices), we show that welfare change can be decomposed into three components that reflect respectively technical change, aggregate distortions and allocative efficiency. Then, using the appropriate firm-level data, we assess the importance of each of these components as sources of welfare improvement in the same set of European countries. / Thesis (PhD) — Boston College, 2010. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.
| Identifer | oai:union.ndltd.org:BOSTON/oai:dlib.bc.edu:bc-ir_101375 |
| Date | January 2010 |
| Creators | Pascali, Luigi |
| Publisher | Boston College |
| Source Sets | Boston College |
| Language | English |
| Detected Language | English |
| Type | Text, thesis |
| Format | electronic, application/pdf |
| Rights | Copyright is held by the author, with all rights reserved, unless otherwise noted. |
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