Book chapters by Alessandra Cepparulo
Report on Public Finances in EMU , 2023
This chapter highlights the main differences between EU total and public investments trends and t... more This chapter highlights the main differences between EU total and public investments trends and those of other advanced economies. It ends listing the investment needs in specific sectors.
European Commission Discussion Paper , 2024
After more than 60 years of peace, Europe faced a watershed moment in its security, in February 2... more After more than 60 years of peace, Europe faced a watershed moment in its security, in February 2022. Following a brief overview of how years of underinvestment and fragmentation have left many weaknesses in EU defence, this study analyses the evolution of the EU defence strategy, the contribution by the EU budget and by national budgets. Finally, the paper investigates to what extent the recent increase of defence spending can have a positive effect on growth, by examining the link between defence spending and economic growth, on the basis of the existing literature.
Quarterly Report on the Euro Area, 2023
During the COVID-19 crisis, public debt ratios strongly increased, adding in several cases to exi... more During the COVID-19 crisis, public debt ratios strongly increased, adding in several cases to existing debt vulnerabilities. This situation calls for a gradual, sustained and growth-friendly reduction of debt ratios towards more prudent levels, especially in the face of increasing costs of population ageing and tightening financing conditions. The section discusses the challenge of ensuring debt sustainability in a growth-friendly manner, based on stylised facts, simulations and further analytical insights. Current EU fiscal rules would impose in some cases an unrealistically demanding, frontloaded fiscal adjustment.
Moreover, they are only loosely related to country-specific debt levels and sustainability challenges. The recent Commission orientations for a reform of the EU economic governance framework focus on debt
sustainability and promoting sustainable growth. A revised EU framework would build around Member States' medium-term fiscal-structural plans. This would not only allow for greater differentiation among countries by taking into account their specific public debt challenges, but it would also provide tangible incentives for growth-friendly reforms and investment.
INSTITUTIONAL PAPER 125, 2020
Graph I.1.15: Reported COVID-19 cases and de aths, EU Cases (new, rhs) Cases (total) Deaths (tota... more Graph I.1.15: Reported COVID-19 cases and de aths, EU Cases (new, rhs) Cases (total) Deaths (total, rhs)
Of all ideas that scholars of institutional matters cherish most, none has spawned more interest ... more Of all ideas that scholars of institutional matters cherish most, none has spawned more interest than judges' impartiality. The demonstration that the judges' behavior cannot be fully insulated from political influence is a household item for several books and articles. Yet, ...
Working Papers, Jan 1, 2010
… , freedom and coercion: a law and …, Jan 1, 2007
1. Variations on the Lupus et Agnus story: in search of the homo sapiens Giuseppe Eusepi and Ales... more 1. Variations on the Lupus et Agnus story: in search of the homo sapiens Giuseppe Eusepi and Alessandra Cepparulo Ad rivum eundem Lupus et Agnus venerant siti compulsi: superior stabat Lupus, longeque inferior Agnus... Cur, inquit, turbulentamfecistimihiistambibenti?... ...
Journal Articles by Alessandra Cepparulo
Environmental Science & Policy, 2024
Decarbonization agendas are hindered by the tensions associated to its regressive distributional ... more Decarbonization agendas are hindered by the tensions associated to its regressive distributional consequences, conflicting political objectives, lack of long-term strategies and countries’ institutional structures. The constitutionalization of environmental provisions, embodying values that cannot be easily compromised, has therefore a strong appeal to underpin the climate change battle. We analyse the recent attempt of France - the first among European countries - to entrench the fight against climate change in its constitution. The reform provides an example of the appeal of constitutionalism when the fracture between long-term climate agendas and social - economic reality is deep, hardly composed by domestic institutions and this puts at risk the legitimacy of decarbonization policies. While advocated by large part of the public opinion, the French constitutional reform failed due to poor concertation and the uncertainty surrounding its juridical impact. The French case offers useful insights for governments turning to the constitution to underpin their climate agendas and for scholars analyzing the emergence and consequences of constitutionalizing the fight against climate change.
Applied Economics, 2024
This article provides an overview of public spending effectiveness (performance) and efficiency a... more This article provides an overview of public spending effectiveness (performance) and efficiency across the European Union over a decade (2007–2019) using a composite indicator. The results show an improvement of public spending effectiveness over time and a deterioration of the efficiency for most countries. Policies should be geared towards increasing the efficiency of government spending.
Comparative Economic Studies, 2023
We explore the distribution of public–private partnerships (PPPs) among the European Union countr... more We explore the distribution of public–private partnerships (PPPs) among the European Union countries, with a special focus on fiscal rules and budgetary constraints while controlling for empirically identified drivers. While offering the opportunity to increase innovation and efficiency in the public sector infrastructure, PPPs allow governments to relax their budget and borrowing constraints. We find that the state of public finances influences the government’s choice of PPPs and makes them more appealing for reasons other than efficiency. Stringent numerical rules on the budget balance also foster government’s opportunism in the choice of PPPs. On the other hand, high levels of public debt increase the country risk, and discourage private investors from PPP contracts. The results highlight the importance of restoring PPP investment choices based on efficiency criteria and adapt fiscal rules to shield public investment while stabilizing private expectations by means of credible trajectories of debt reduction. The findings contribute to the debate on the role of fiscal rules in fiscal policy and of PPPs in infrastructure financing.
The European Journal of Health Economics , 2021
In Italy, the COVID-19 pandemic and the death of many elderly people have put in evidence the une... more In Italy, the COVID-19 pandemic and the death of many elderly people have put in evidence the uneven territorial distribution of nursing homes, which have amplified the spread and severity of the pandemic. By applying a pooled OLS model to the Italian regions, over the 2010-18 period, we investigate the demand factors, market forces and institutional drivers of the spatial distribution of residential healthcare for the elderly. Using a fine-grained approach that considers specific regional and age-related elements and the market environment, which can reduce or increase the pressure on regional governments to provide formal assistance, we find that the financial resources and the availability of unemployed women as potential caregivers explain the distribution of expenditure better than the health needs of the elderly. As a result, the expenditure is concentrated in richer and more financially autonomous regions and it is not congruent with the distribution of chronicity, health and frailty factors or income among the elderly. These critical issues of the care services for frail elderly people, related to a highly decentralized governance and resulting in fragmented, market-driven provision, could be attacked only by a national reform.
Applied Economics Letters, 2021
We assess the growth friendliness, both for the short and long term, of the budget composition ov... more We assess the growth friendliness, both for the short and long term, of the budget composition over the last 16 years (2001 -2017) for EU countries based on the OECD taxonomy of budget items – growth connection. Budget composition is still far from its optimum, sizeable gaps exist for almost all EU countries.
Government Information Quarterly, 2021
Using a novel dataset on the diffusion of public eServices at the city level in EU 15, this paper... more Using a novel dataset on the diffusion of public eServices at the city level in EU 15, this paper contributes to extant empirical literature in three ways. First, it extends the coverage of public eServices beyond eGovernment, investigating four service categories: Infomobility, eProcurement, eGovernment and eHealth. Second, it provides information for both a cross-country and cross-municipality comparison. Third, on the methodological side, it also extends the literature on composite indicators at a municipal level. Cities exhibiting the highest diffusion of public eServices are found to be medium-large, highly endowed with well-educated human capital, and characterised by a lively industrial atmosphere favoured by a reasonable number and variety of production and service activities. The relative performance of the European cities helps identify plausible directions to be taken for policies aimed at favouring the diffusion of public service innovation in Europe.
Journal of infrastructure, policy and development, 2019
Public-Private Partnerships (PPPs) are mostly presented as a means to introduce efficient procure... more Public-Private Partnerships (PPPs) are mostly presented as a means to introduce efficient procurement methods and better value for money to taxpayers. However, the complexity of the PPP mechanism, their lack of transparency, accounting rules and implicit liabilities make it often impossible to perceive the amount of public expenditure involved and the long-run impact on taxpayers, providing room for fiscal illusion, i.e., the illusion that PPPs are much less expensive than traditional public investments. This psaper, thanks to a systematic review of the literature on the EU countries experience, tries to unveil the sources of this illusion by looking at the reasons behind the PPPs' choice, their real costs, and the sources of fiscal risks. The literature suggests that PPPs are more costly than public funding, especially when contingent liabilities are not taken into account, and are employed as mechanisms to circumvent budgetary restrictions and to spend off-balance. The paper concludes that the public sector should share more risks with private sectors by reducing the amount of guarantees, and should prevent governments from operating through a sleight of hand that deflects attention away from off-balance financing, by applying a neutral fiscal recording system.
Climate policy-making and decarbonization require instruments to create and manage economic expec... more Climate policy-making and decarbonization require instruments to create and manage economic expectations. There is increasing concern that the existing panoply of domestic (emission trading schemes, regulation, taxes) and external instruments (climate change treaties) be insufficient to anchor expectations to decarbonization and isolate abatement policies from risk to be reneged or insufficiently implemented. The paper argues that constitutional provisions could represent the help policymakers need in committing to combat climate change and setting their policy goals in a low-carbon direction. This role is empirically confirmed by applying a pooled OLS on a sample of 168 countries covering different geographic areas over the period 2010–2014. We also confirm the role of multi-level governance in disciplining carbon emissions and advocate for the right to atmospheric integrity to be embedded at EU treaty level.
The aim of this paper is to analyse empirically whether the
level of institutional quality influe... more The aim of this paper is to analyse empirically whether the
level of institutional quality influences how financial development
affects poverty for a sample of developing countries covering
the period from 1984 to 2012. Using an interaction term
constructed as a product between financial development and institutional
quality we find that the pro-poor impact of financial
development decreases as the quality of institutions rises. Such a
differential effect can be ascribed to the capacity of banks to provide
functions that mimic those performed by an institutional
framework that works well. The results of this paper can be used
for policy management.
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Book chapters by Alessandra Cepparulo
Moreover, they are only loosely related to country-specific debt levels and sustainability challenges. The recent Commission orientations for a reform of the EU economic governance framework focus on debt
sustainability and promoting sustainable growth. A revised EU framework would build around Member States' medium-term fiscal-structural plans. This would not only allow for greater differentiation among countries by taking into account their specific public debt challenges, but it would also provide tangible incentives for growth-friendly reforms and investment.
Journal Articles by Alessandra Cepparulo
level of institutional quality influences how financial development
affects poverty for a sample of developing countries covering
the period from 1984 to 2012. Using an interaction term
constructed as a product between financial development and institutional
quality we find that the pro-poor impact of financial
development decreases as the quality of institutions rises. Such a
differential effect can be ascribed to the capacity of banks to provide
functions that mimic those performed by an institutional
framework that works well. The results of this paper can be used
for policy management.
Moreover, they are only loosely related to country-specific debt levels and sustainability challenges. The recent Commission orientations for a reform of the EU economic governance framework focus on debt
sustainability and promoting sustainable growth. A revised EU framework would build around Member States' medium-term fiscal-structural plans. This would not only allow for greater differentiation among countries by taking into account their specific public debt challenges, but it would also provide tangible incentives for growth-friendly reforms and investment.
level of institutional quality influences how financial development
affects poverty for a sample of developing countries covering
the period from 1984 to 2012. Using an interaction term
constructed as a product between financial development and institutional
quality we find that the pro-poor impact of financial
development decreases as the quality of institutions rises. Such a
differential effect can be ascribed to the capacity of banks to provide
functions that mimic those performed by an institutional
framework that works well. The results of this paper can be used
for policy management.
microeconomic side, i.e. on the consequences of inflation on “every” household given its own consumption path. This paper addresses this issue by calculating the distributional impact of inflation for Italian households from 1997 to 2007 using data on households’ consumer expenditures. Both a descriptive and welfare analysis of price changes are performed, showing that inflation has followed an uncertain path of distributional impacts over time, yet with a large concentration of welfare losses in the period surrounding the introduction of the euro currency.
expectations anchored, while governments put fiscal support measures in place to protect households and firms from the impact of higher energy prices. The challenge for the future is now to reduce the high
levels of public debt accumulated in some euro area countries, while making decisive progress on the green and digital transitions. The new EU fiscal framework will help enhance the macroeconomic stabilisation role of fiscal policy, while focusing on debt sustainability and growth-enhancing policies.
transitions. The findings of a review of theoretical and empirical literature suggest that Member States public investment appears to have been adversely affected more by concerns on debt sustainability and
related market pressures than by the EU fiscal rules. Still, the fiscal framework may provide stronger incentives to increase and sustain public investment, also during periods of fiscal consolidation.
Considering the large additional investment needs to facilitate the green and digital transitions towards a resilient EU economy the section considers some elements that would strengthen the role of the fiscal
framework in promoting public and private investment spending.
investments. It not only surveys the academic literature, but also presents the complementary recommendations for a sound investment
management and governance developed by international institutions, which are key to enhancing the efficiency of public investment.
The fiscal stance estimates are based on the Commission 2024 spring forecast. For 2025, in an alternative to the no-policy-change forecast, illustrative results are also presented, assuming that Member States will follow a fiscal adjustment needed to keep their public debt on a sustainable path and bring or keep deficit below the reference value, as defined in the context of the new EU fiscal framework.
Under this ‘normative approach’, the euro area fiscal stance would be contractionary in 2025, ranging from around ¼ % to around ½ % of GDP. Such a contractionary fiscal stance is considered to be broadly
appropriate, from a debt sustainability standpoint but also with a view to supporting monetary policy in lowering inflation. The fiscal stance factors in the impulse from the EU budget, which currently includes the Recovery and Resilience Facility, created in the wake of the pandemic to support the recovery of the EU economy through high quality spending and reforms.
Stability and Growth Pact, the introduction of new EU instruments, and favourable financing conditions, Member States responded with a powerful mix of discretionary fiscal support, the full operation of
automatic stabilisers and ample liquidity support. As a result, fiscal policy mitigated a fall in economic activity in 2020, though at the cost of large increases in government deficit and debt ratios. The EU headline deficit increased to about 7% of GDP in 2020 from 0.5% in 2019, while the aggregate debt ratio jumped to 92% of GDP in 2020 from 79% a year earlier.
Fiscal policy at large – including automatic stabilisers – will support a strong and sustainable recovery in 2021 and 2022. As highlighted by the Commission’s Communication of 2 June 2021, the job of supporting European economies is not yet done.(1) Complemented by a highly accommodative monetary policy stance, fiscal policy is expected to remain supportive in 2021 and 2022, thus assisting European businesses, workers and citizens as they get back on their feet. However, the nature of the fiscal support can be expected to change. As the health situation improves, Member States can scale back their emergency aid and focus on supporting economic recovery. Public investment will play an important role during the recovery phase.
Underlying fiscal positions are expected to vary across Member States. As in the past, changes in fiscal positions are analysed through the lenses of the expenditure benchmark, with specific adjustments
to address the current challenges. In most Member States, the growth of nationally-financed current expenditure (net of new revenue measures) in 2021 and 2022 is projected to exceed the rate of mediumterm potential growth, pointing to a fiscal relaxation and a positive contribution to the overall fiscal stance. A fiscal relaxation of more than 0.5% of GDP in both years is expected in a couple of Member
States. By contrast, about a quarter of Member States expect some tightening in line with improving economic situation. To maximise support to the recovery without creating a permanent burden on public
finances, the growth of current expenditure (net of new revenue measures) should be kept under control, and be limited in Member States with high debt.
The fiscal stance for the euro area as a whole is projected to remain supportive in 2021 and 2022.
Including the fiscal impulse provided at the EU level through the Recovery and Resilience Facility (RRF) and setting aside the phasing out of temporary emergency measures, fiscal policies will provide additional
support to aggregate demand in the euro area of around 1¾% of GDP in 2021 and slightly more than ¼% of GDP in 2022. In 2022, this is partly due to increases in nationally-financed current expenditure, which
are expected to continue to exceed the rate of medium-term potential growth. Monetary policy is expected to work hand-in-hand with fiscal policy as the recovery gains traction.
The fiscal stance, stemming from national budgets and the EU budget, is expected to remain supportive in almost all Member States in 2021 and 2022 on average. The RRF will provide largescale financial support to Member States of up to €312.5 billion in grants and €360 billion in loans in the period to 2026. RRF grants will fund high-quality investment projects and enable productivity-enhancing reforms, without giving rise to higher national deficit and debt ratios. These grants and other sources of EU financing will boost public investment in Member States by an average of about 0.5% of GDP per year in 2021 and 2022, thus helping Member States to maintain supportive fiscal stances. Differences
between Member States will depend on the allocation of RRF grants relative to GDP and the degree of absorption of those grants.
The pandemic has heightened challenges to debt sustainability. The Commission’s latest debt sustainability analysis finds that seven Member States face high fiscal sustainability risks in the medium
term, while nine others face medium risks. These results are mostly driven by higher debt ratios than before the crisis (due to the severe recession and the needed fiscal response), most of which are projected
to fall only gradually. However, the government debt projections and, in turn, the debt sustainability assessment have improved compared to the results published in the 2020 Debt Sustainability Monitor. In
the majority of Member States, and especially in countries with high sustainability risks in the medium term, fully implementing the plans presented in the 2021 Stability and Convergence Programmes would
alleviate sustainability risks. Generally, the debt dynamics are expected to benefit from the assumed progressive correction of the primary balance and from negative interest - growth differentials. In
particular, the prevailing favourable financial environment (as reflected by financial market expectations) and the economic recovery should favour government debt deleveraging over the medium term.
Moreover, the implementation of reforms and investments under the RRF is expected to support potential growth, mitigating debt sustainability risks.
It looks into the composition, performance and efficiency of public expenditure across countries and
specific functions of government. This approach allows for some granularity in the analysis. Using a
literature survey, semi-disaggregated composite indicators of performance and an efficiency frontier
approach, the analysis provides a rich set of results on the quality of public spending, giving first
indications on where room for improvements appears to be large. The overall results turn out fairly mixed,
providing a nuanced picture of the growth-friendliness of public expenditure in the EU both in terms of
level and change.