Policy work

Alessio's policy research has concentrated on Eurozone macroeconomic adjustment programmes, the Italian economy, the EU single market, territorial- and social- inequalities, structural reforms, competitiveness, and issues related to the G7/G20. He has been a keynote and invited speaker at several conferences, and produced written testimonies for the European Parliament and the Italian Senate.

Policy papers

The EU - Japan Economic Partnership Agreement (with André Sapir and Sonali Chowdhry)

European Parliament INTA Committee Study, 2018.

Bruegel version here.

Abstract: This report independently assesses the EU-Japan Economic Partnership Agreement. We find that the EPA establishes an ambitious framework to further liberalise and better organise trade, covering goods, services, intellectual property and investment, tariff- and non-tariff measures, and regulatory cooperation. Given its depth and breadth, and that it is unprecedented in including provisions on corporate governance, SMEs, and climate change, the EPA is set to become a benchmark for future trade agreements. Joining two open economies with high income levels and regulatory standards, the agreement is expected to generate benefits by boosting trade within sectors, minimising sectoral relocation and negative employment effects. Agri-food, textiles and leather products are where the EU can expect to make the greatest gains. Furthermore, the EPA will boost the EU’s economic presence and political relevance in the Asia-Pacific area. Going beyond its economic benefits, the agreement also has significant non-economic implications. Reinforced cooperation will enhance the ability of both parties to shape the course of global developments in a manner that better reflects their shared interests and values, such as their commitment to a rule-based global trade system and the fight against global warming.

Review of EU-third country cooperation on policies falling within the ITRE domain in relation to Brexit (with J. Scott Marcus, Georgios Petropoulos, André Sapir, Simone Tagliapietra, Reinhilde Veugelers, and Georg Zachmann)

European Parliament ITRE Committee Study, 2017.

Bruegel version here.

Abstract: This study was prepared at the request of the European Parliament’s Committee on Industry, Research and Energy (ITRE). It provides a critical assessment of the implications of existing models of cooperation of third countries with the European Union in each of four thematic areas for which the ITRE is responsible (energy, electronic communications, research policy, and small business policy. The relative desirability to the EU of EEA membership, bilateral relationships (as with Switzerland), a new generation Free Trade Agreement (FTA), membership in the Energy Community, or participation in the Horizon 2020 or COSME programmes are considered.

An Italian job: the need for collective wage bargaining reform

Bruegel Policy Contribution 2016/11, 2016.

Abstract: Since the mid-1990s, Italy has been characterised by a lack of labour productivity growth, combined with a 60 percent growth in labour costs, 20 percentage points above euro-area average consumer price growth. As a consequence, Italy has become less competitive compared to its euro-area partners, the profitability of its firms has dropped and real GDP-per-capita has flatlined. At the root of the substantial discrepancy between wages and productivity is Italy’s current system of centralised wage bargaining which, in many ways, is designed without regard for the underlying industrial structure and geographical heterogeneity of the Italian economy. This has fostered perverse incentives and imbalances within Italy. Collective wage bargaining, and in particular the determination of base salaries, should be moved from the national to the regional level for all contracts, in the public and private sectors. The Mezzogiorno, which might superficially be seen as losing out from this policy, would actually gain the most in competitiveness terms. Furthermore, measures should be taken so that, in the long run, the Italian industrial structure evolves into a less fragmented small-company-based economy. This firm consolidation would likely expand the use of firm-level agreements and performance payments, and would improve Italy’s productivity and competitiveness overall.

Governance economica mondiale: il ruolo dell’Italia nel G20 e nel G7 (with Matteo Villa)

Senato della Repubblica, Approfondimento per l’Osservatorio di Politica Internazionale, No. 115, 2015.

Bruegel blog post version here.

Sommario: In vista della Presidenza del G7 nel 2017, questo Approfondimento si propone di esplorare come è cambiato il ruolo del G7/8 e del G20 negli ultimi anni, descrivere il ruolo che l’Italia è riuscita a giocare in entrambi i forum internazionali, e cercare di individuare alcuni fattori che influenzano con una certa sistematicità l’esito dei vertici.

Reform momentum and its impact on Greek growth

Bruegel Policy Contribution 2015/12, 2015.

Abstract: Greece has an imperfect track-record of structural reform implementation. However, the poor growth outcome of the Greek programmes is also a consequence of the timing and composition of reforms, which were not optimally geared towards a speedy transition to a new growth model based on the private sector. While the main responsibility for this lies with the Greek authorities, international institutions share the responsibility for the poor growth-enhancing effect of reforms. In the current context, further structural reform efforts should be mainly targeted at supporting Greece’s speedy return to solid growth rates. This is not only because poverty and unemployment have reached very high levels, but also for political economy reasons: reforms must quickly be seen to be working in order to buttress the consensus in favour of reform. Further efforts should be made to improve Greece’s business environment and to liberalise product markets, in addition to shifting taxation away from labour and towards consumption. Reforms to improve the quality of institutions should continue and are very much needed in the Greek setting, while taking into account that their demanding implementation might use up administrative capacity and their impact on growth will only be seen over long time horizons.

The twenty-first century needs a better G20 and a new G7+ (with Jim O'Neill)

Bruegel Policy Contribution 2014/13, 2014.

Bruegel blog post version here.

Abstract: During the 2008 financial crisis, the G20 was hastily elevated to ‘global economic steering committee’. In the early stages of the crisis, the G20 was an effective forum for crisis containment. As the crisis has eased, however, the G20 has lost both direction and momentum. Governments and policymakers have felt less need to act in unison and have rather refocused on their national agendas, as is their duty and primary function. However, effective global governance is needed permanently, not just in crisis times. It is desirable to have more representative and effective global governance that, among other things, is equipped to prevent crises rather than just react to them. In an environment of rapid change in global patterns of trade and wealth creation, a new revamped (but highly representative) grouping should be created within the G20, to provide leadership on key economic policy matters. Euro-area members should give up their individual seats in this G7+, allowing room for China and other large emerging economies. Without euro-area countries taking such a step, it would be impossible to reconcile effectiveness and representation in this new G7+, which would take charge of decision making on global economic imbalances, financial and monetary issues. All existing G20 countries, including individual euro-area countries, would however remain in the G20, which could potentially expand and would remain the prime forum for discussion on all remaining matters at global level.

Austerity and Poverty in the European Union (with Zsolt Darvas, Pia Huettl, Carlos De Sousa, and Olga Tschekassin)

European Parliament EMPL Committee Study, 2014.

Bruegel version here.

Abstract: Europe faces major social challenges, in which fiscal consolidation may have played a role. This Policy Department A study aims to provide the Committee for Employment and Social Affairs with an analysis of the speed and composition of fiscal consolidation strategies. It describes major social developments in Europe, with a focus on poverty, and considers and interprets the links between fiscal consolidation measures and social developments.

The Troika and Financial Assistance in the Euro Area: Successes and Failures (with André Sapir, Guntram B. Wolff, and Carlos de Sousa)

European Parliament ECON Committee Study, 2014.

Bruegel version here.
Bruegel blog post version here.

Abstract: This study provides a systematic evaluation of financial assistance for Greece, Ireland, Portugal and Cyprus. All four programmes, and in particular the Greek one, are very large financially compared to previous international programmes because macroeconomic imbalances and the loss of price competitiveness that accumulated prior to the programmes were exceptional. Yet programmes were based on far too optimistic assumptions about adjustment and recovery in Greece and Portugal. In all four countries, unemployment increased much more significantly than expected. Although fiscal targets were broadly respected, debt-to-GDP ratios ballooned in excess of expectations due to sharp GDP contraction. The GDP deterioration was due to four factors: larger-than-expected fiscal multipliers, a poorer external environment, including an open discussion about euro area break-up, an underestimation of the initial challenge and the weakness of administrative systems and of political ownership. The focus of surveillance of conditionality evolved from fiscal consolidation to growth-enhancing structural measures. The Greek programme is the least successful one. Ireland successfully ended the programme in December 2013, but problems remain in the banking system. Exit from the Portuguese programme in May 2014 appears feasible but it should be accompanied by a precautionary credit line. It is too early to make pronouncements on the Cypriot programme, which only started in May 2013, but it can safely be said that there have been major collective failures of both national and EU institutions in the run-up of the programme.

The accuracy of the European Commission's forecasts re-examined (with Laura Gonzalez-Cabanillas)

European Economy, Economic Paper 476, pp. 1-58, 2012.

Related Bruegel blog post here.

Abstract: This paper analyses the Commission's forecast track record, by building on previous analyses. The extension of the observation period to 2011 allows a first analysis of forecast accuracy during the years of the economic and financial crisis. Over the full timespan, forecasts for the EU and euro area are found to be generally unbiased. The same holds true for the outlook for most Member States, largely confirming earlier results. Moreover, the Commission services track record appears generally in line with that of the OECD, IMF and Consensus Economics, and in some cases better. Finally, while the analysis points to a limited impact of the crisis on the accuracy of the Commission's current-year forecasts, a significant deterioration of the accuracy of year-ahead projections is found. This applies in particular for the forecasts of GDP, investment, inflation and the government budget balance, due mainly to larger forecast errors in the recession year 2009, which by all standards proved exceptional and unanticipated by institutional and market forecasters.

Selected Bruegel blog posts

Improving the efficiency and legitimacy of the EU: A bottom-up approach

The great fiscal lever: An Italian economic obsession

Italian populism calls for hard choices

Renzi is going all in on the Constitutional referendum: what are the (updated) odds?

The G20 in a post-Brexit world

How to make the single market more inclusive after Brexit

No coordination without representation

Corruptionomics in Italy

The ‘pub economics’ of structural reforms

Is the ECB sacrificing reforms on the altar of inflation?

Are Italy’s stars of reform aligning?

Addressing competitiveness or financial fragmentation?