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Paolo Liberati

University of Roma Tre, Economics, Faculty Member

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PhD in Economics, University of Cambridge, UK
MSc in Economics with distinction, University of York, UK
Laurea cum laude, University of Rome "La Sapienza", Italy
Phone: +39 06 57335612
Address: Via Silvio D'Amico 77, 00145 Rome, Italy

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Rodrigo Luís Kanayama

Universidade Federal do Paraná

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Manchester Metropolitan University

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Celal Bayar University

Heidi Jane Smith

Universidad Iberoamericana - Mexico

LUISS Guido Carli

CSIC (Consejo Superior de Investigaciones Científicas-Spanish National Research Council)

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Papers by Paolo Liberati

Towards a Two-rate VAT in Italy: Distributional and Welfare Effects

This paper assesses the redistributive effects of two recent adjustments of indirect taxes in Ita... more This paper assesses the redistributive effects of two recent adjustments of indirect taxes in Italy, in 1995 and in 1997, in view of the convergence to a two-rate VAT structure. Although reducing the number of tax rates from four to three in 1997, we find that the two adjustments did not cause significant distributional effects. The authors argue that a two- rate VAT could have replaced the 1997 adjustment providing the same revenue, redistributing the tax burden from less rich to richer households and significantly inreasing welfare.

Inequality and Instability

Technology transfer with search intensity and project advertising

The Journal of Technology Transfer, 2018

In this paper we present a model where technology transfer is embedded into a competitive model o... more In this paper we present a model where technology transfer is embedded into a competitive model of utility and profit maximization and is the result of a matching process between heterogeneous Knowledge Transfer Offices (KTOs) and innovative firms. Our model improves on previous literature by endogenizing the process that drives the dynamics of university researchers in search and firm vacant projects. We are able to show that the KTOs' reservation fee rate must be greater than the ratio between the marginal researcher cost and the marginal utility of matched projects, and that technology transfer strictly depends on the efficiency units of searching researchers and vacant projects. Further, we show that firm technological progress might be too low when KTOs too much intensively search for project matches. This occurs because both sides of the market ignore the externalities of their decisions. Finally, behavioral complementarity, substitutability, and free riding are all potential equilibrium outcomes.

The growth and variability of regional taxes: an application to Italy

Regional Studies, 2017

A matching model of university–industry collaborations

Small Business Economics, 2015

In this paper we present a simple model of university-industry collaborations with heterogeneous ... more In this paper we present a simple model of university-industry collaborations with heterogeneous agents, which is the standard case of technology transfer. We study the characteristics of the matching process, that makes this exchange in technology transfer either efficient or unfeasible. We show that the functioning of the technology transfer market implies dual-trading externalities. We refer to these externalities as congestion because they are caused by the tightness that searching firms and researchers cause to each other during trade.

Progressivity-Improving Vat Reforms in Italy

International institutions are recommending policies aimed at shift- ing the tax burden from labo... more International institutions are recommending policies aimed at shift- ing the tax burden from labour and business incomes to less growth- detrimental forms of taxation, such as consumption taxes. However, de- spite the expected positive macroeconomic e�ects, a criticism about in- creasing the role of Vat arises from its alleged regressivity over income. Yet, the empirical evidence on this issue is very narrow due to the unavail- ability of joint and detailed data on income and consumption. This paper �lls this gap by measuring the distributional impact of Vat in Italy using information on both households' expenditures and incomes integrated in a micro simulation model (EGaLiTe). The paper shows that the regressive pro�le of Vat in terms of disposable income is almost entirely driven by the very bottom and the top quantiles, which however, at least in part, can be a�ected by temporary unalignments of income and consumption. Fur- thermore, the current Vat structure in Italy is not ...

The Distributional Effects of Indirect Tax Changes in Italy

This paper evaluates the distributional and welfare effects of two recent changes of Value Added ... more This paper evaluates the distributional and welfare effects of two recent changes of Value Added Tax (VAT) and excise taxes in Italy applying and comparing two related and complementary methods of analysis: the first based on the distributional characteristics of Feldstein (1972) and recently applied by Newbery (1995); the second based on the theory of marginal dominance developed by Mayshar and Yitzhaki (1996). The paper finds no evidence that the reforms have redistributed purchasing power among households. But the most striking result is that a simpler two-rate VAT structure, set according to the European directives on VAT coordination, could have replaced the present system producing the same revenue and increasing welfare. This last result provides a clear instance in which reducing the number of VAT rates can be welcome even in the presence of distributional concerns.

The Impact of Economic Openness on the Vertical Structure of the Public Sector

SSRN Electronic Journal, 2008

The aim of this paper is to investigate the impact of economic openness on the vertical structure... more The aim of this paper is to investigate the impact of economic openness on the vertical structure of the public sector within a country. To tackle this issue we set up a simple theoretical model of fiscal federalism, where both central and local public spending enter the objective functions of both a central government and an aggregate local public sector, accommodating a wide range of behaviours. The degree of economic openness is assumed to erode central tax revenues and through this channel to affect the size of central spending, the size of grants paid to local governments and the optimal amount of local public spending. Consequences on the degree of decentralization are investigated. The main findings are that for a large subset of parameters an increase in economic openness leads to: a) a lower level of central government expenditures; b) a lower level of general government expenditures; c) a higher level of local taxation; d) a higher degree of public sector decentralization.

Government Size and Trade Openness: Some Additional Insights

Research in World Economy, 2013

This paper provides additional insights on the relationship between government size and trade ope... more This paper provides additional insights on the relationship between government size and trade openness using a panel of countries drawn from the World Development Indicators and the Penn World Tables 7.0 from 1962 to 2009. It is shown that the compensation hypothesis proposed by Rodrik (1998) and revisited by Alesina and Wacziarg (1998) and by Ram (2009) cannot be attributed general validity. Rather, it may be driven by specific geographical areas.

Economic Integration, Tax Erosion, and Decentralisation: An Empirical Analysis

SSRN Electronic Journal, 2011

This paper addresses the issues of whether and how the degree of economic integration may affect ... more This paper addresses the issues of whether and how the degree of economic integration may affect central government tax revenues and the intensity of decentralisation. To this purpose, we empirically test the direct impact of economic integration on central tax revenues using the concept of implicit tax rates (ITRs) updated to take into account mobile and immobile capital taxation. On this basis we derive a country-specific measure of tax erosion that is used as a determinant of the decentralisation of the public sector in an Arellano-Bond environment. We find that: i) an increase of economic integration generates a downward pressure on ITRs on mobile capital, which is growing at increasing rates as far as economic integration increases; ii) the process of tax erosion gives rise to a corresponding process of increasing public sector decentralisation.

Democratic, Plutocratic and Social Weights in Price Indexes

Theoretical Economics Letters, 2012

This paper introduces social considerations into the calculation of the price index. To this purp... more This paper introduces social considerations into the calculation of the price index. To this purpose, recourse is made to the concept of distributional characteristic. It is shown how an aggregate price index can be expressed as a weighted average of commodityspecific prices, with weights that depend on both the aggregate share of consumption and the way in which consumption is distributed across households. The proposed index provides a complementary basis for the analysis of the impact of inflation and for the calculation of its social value.

The World Distribution of Income And Its Inequality, 1970-2009

Review of Income and Wealth, 2013

This paper provides a full decomposition of world inequality, as measured by the Gini coefficient... more This paper provides a full decomposition of world inequality, as measured by the Gini coefficient, in the period 1970-2009. In particular, using the Analysis of Gini (ANOGI), the paper describes the evolution of between inequality, within inequality, and the impact of overlapping on both factors. While there is evidence that between inequality in the last decade significantly declined due to the rapid Chinese growth, within inequality and overlapping went in the opposite direction. Furthermore, with the exception of some Asian countries, the rest of the world has not moved significantly. As a result, world inequality remains high by any standard.

UK Privatization and Household Welfare

FinanzArchiv, 2018

I wish to thank D. Newbery for his comments and for useful discussions on previous versions of th... more I wish to thank D. Newbery for his comments and for useful discussions on previous versions of this paper. The usual disclaimer applies. JEL CLASSIFICATION: D10 D60-KEYWORDS: Privatisation-household welfare società italiana di economia pubblica dipartimento di economia pubblica e territoriale-università di Pavia

Economic integration and government size: a review of the empirical literature

Financial Theory and Practice, 2011

How economic integration affects the vertical structure of the public sector

Economics of Governance, 2011

Abstract This paper investigates the impact of economic integration on the vertical structure of ... more

Economic Openness, Tax Erosion, and Decentralization: An Empirical Analysis

ABSTRACT The aim of this paper is to carry out an empirical investigation on the relation between... more ABSTRACT The aim of this paper is to carry out an empirical investigation on the relation between economic integration, tax erosion and the degree of public sector decentralisation in a sample of OECD countries. This paper addresses this topic by using economic integration as a way to &quot;open&quot; to external constraints the debate about the determinants of public sector decentralisation. Our empirical strategy is articulated in two stages. In the first stage we investigate the relation between Implicit Tax Rates (ITRs) on mobile capital and economic openness (EO). If this relation turns to be statistically significant, then we compute country-specific elasticities of ITR with respect to EO. In the second stage we will focus on the relation between these elasticities and the degree of decentralisation. The results of the analysis are encouraging. Evidence is provided that economic integration erodes effective tax rates on mobile capital, while producing no effect on other tax bases. Furthermore, the generated elasticities have some explanatory power in shaping the degree of decentralisation.

The Personal Income Tax in Italy: Why Does It Change?

Giornale degli Economisti, 2005

This paper analyses the effects of the personal income tax (PIT) changes implemented in Italy in ... more

The distributional and welfare impact of inflation in Italy

Working Papers, 2010

The entrance of Italy in the Euro area in 2001 has given rise to a wide debate about the percepti... more The entrance of Italy in the Euro area in 2001 has given rise to a wide debate about the perception of inflation on households' well-being. However, most of the debate has involved the measurement of the "correct" consumer price index at national level. Much less analysis has been ...

Towards a two-rate VAT in Italy: distributional and welfare effects

Cambridge Working Papers in Economics, 1998

This paper assesses the redistributive effects of two recent adjustments of indirect taxes in Ita... more

A Decomposition of the Personal Income Tax Changes in Italy: 1995–2000

FinanzArchiv: Public Finance Analysis, 2008

The effects of personal income tax changes are usually analyzed by comparing the inequality of in... more The effects of personal income tax changes are usually analyzed by comparing the inequality of income distributions before and after the tax policy change on a fixed pretax income distribution. This constant-population methodology aims at isolating the ''pure'' redistributive effect of the tax legislation. On the basis of the OECD's 1987 analysis, this paper proposes a methodology to disentangle the pure effect of tax changes from the influence of other nontax factors when the pretax income distribution is not fixed. For the Italian case, it is shown that the additional redistributive outcome displayed by changes of tax laws between 1995 and 2000 is only one-fourth of the total change of the redistributive impact in the same period and is outweighed by the effect of inflationary fiscal drag.

Towards a Two-rate VAT in Italy: Distributional and Welfare Effects

This paper assesses the redistributive effects of two recent adjustments of indirect taxes in Ita... more This paper assesses the redistributive effects of two recent adjustments of indirect taxes in Italy, in 1995 and in 1997, in view of the convergence to a two-rate VAT structure. Although reducing the number of tax rates from four to three in 1997, we find that the two adjustments did not cause significant distributional effects. The authors argue that a two- rate VAT could have replaced the 1997 adjustment providing the same revenue, redistributing the tax burden from less rich to richer households and significantly inreasing welfare.

Inequality and Instability

Technology transfer with search intensity and project advertising

The Journal of Technology Transfer, 2018

In this paper we present a model where technology transfer is embedded into a competitive model o... more In this paper we present a model where technology transfer is embedded into a competitive model of utility and profit maximization and is the result of a matching process between heterogeneous Knowledge Transfer Offices (KTOs) and innovative firms. Our model improves on previous literature by endogenizing the process that drives the dynamics of university researchers in search and firm vacant projects. We are able to show that the KTOs' reservation fee rate must be greater than the ratio between the marginal researcher cost and the marginal utility of matched projects, and that technology transfer strictly depends on the efficiency units of searching researchers and vacant projects. Further, we show that firm technological progress might be too low when KTOs too much intensively search for project matches. This occurs because both sides of the market ignore the externalities of their decisions. Finally, behavioral complementarity, substitutability, and free riding are all potential equilibrium outcomes.

The growth and variability of regional taxes: an application to Italy

Regional Studies, 2017

A matching model of university–industry collaborations

Small Business Economics, 2015

In this paper we present a simple model of university-industry collaborations with heterogeneous ... more In this paper we present a simple model of university-industry collaborations with heterogeneous agents, which is the standard case of technology transfer. We study the characteristics of the matching process, that makes this exchange in technology transfer either efficient or unfeasible. We show that the functioning of the technology transfer market implies dual-trading externalities. We refer to these externalities as congestion because they are caused by the tightness that searching firms and researchers cause to each other during trade.

Progressivity-Improving Vat Reforms in Italy

International institutions are recommending policies aimed at shift- ing the tax burden from labo... more International institutions are recommending policies aimed at shift- ing the tax burden from labour and business incomes to less growth- detrimental forms of taxation, such as consumption taxes. However, de- spite the expected positive macroeconomic e�ects, a criticism about in- creasing the role of Vat arises from its alleged regressivity over income. Yet, the empirical evidence on this issue is very narrow due to the unavail- ability of joint and detailed data on income and consumption. This paper �lls this gap by measuring the distributional impact of Vat in Italy using information on both households' expenditures and incomes integrated in a micro simulation model (EGaLiTe). The paper shows that the regressive pro�le of Vat in terms of disposable income is almost entirely driven by the very bottom and the top quantiles, which however, at least in part, can be a�ected by temporary unalignments of income and consumption. Fur- thermore, the current Vat structure in Italy is not ...

The Distributional Effects of Indirect Tax Changes in Italy

This paper evaluates the distributional and welfare effects of two recent changes of Value Added ... more This paper evaluates the distributional and welfare effects of two recent changes of Value Added Tax (VAT) and excise taxes in Italy applying and comparing two related and complementary methods of analysis: the first based on the distributional characteristics of Feldstein (1972) and recently applied by Newbery (1995); the second based on the theory of marginal dominance developed by Mayshar and Yitzhaki (1996). The paper finds no evidence that the reforms have redistributed purchasing power among households. But the most striking result is that a simpler two-rate VAT structure, set according to the European directives on VAT coordination, could have replaced the present system producing the same revenue and increasing welfare. This last result provides a clear instance in which reducing the number of VAT rates can be welcome even in the presence of distributional concerns.

The Impact of Economic Openness on the Vertical Structure of the Public Sector

SSRN Electronic Journal, 2008

The aim of this paper is to investigate the impact of economic openness on the vertical structure... more The aim of this paper is to investigate the impact of economic openness on the vertical structure of the public sector within a country. To tackle this issue we set up a simple theoretical model of fiscal federalism, where both central and local public spending enter the objective functions of both a central government and an aggregate local public sector, accommodating a wide range of behaviours. The degree of economic openness is assumed to erode central tax revenues and through this channel to affect the size of central spending, the size of grants paid to local governments and the optimal amount of local public spending. Consequences on the degree of decentralization are investigated. The main findings are that for a large subset of parameters an increase in economic openness leads to: a) a lower level of central government expenditures; b) a lower level of general government expenditures; c) a higher level of local taxation; d) a higher degree of public sector decentralization.

Government Size and Trade Openness: Some Additional Insights

Research in World Economy, 2013

This paper provides additional insights on the relationship between government size and trade ope... more This paper provides additional insights on the relationship between government size and trade openness using a panel of countries drawn from the World Development Indicators and the Penn World Tables 7.0 from 1962 to 2009. It is shown that the compensation hypothesis proposed by Rodrik (1998) and revisited by Alesina and Wacziarg (1998) and by Ram (2009) cannot be attributed general validity. Rather, it may be driven by specific geographical areas.

Economic Integration, Tax Erosion, and Decentralisation: An Empirical Analysis

SSRN Electronic Journal, 2011

This paper addresses the issues of whether and how the degree of economic integration may affect ... more This paper addresses the issues of whether and how the degree of economic integration may affect central government tax revenues and the intensity of decentralisation. To this purpose, we empirically test the direct impact of economic integration on central tax revenues using the concept of implicit tax rates (ITRs) updated to take into account mobile and immobile capital taxation. On this basis we derive a country-specific measure of tax erosion that is used as a determinant of the decentralisation of the public sector in an Arellano-Bond environment. We find that: i) an increase of economic integration generates a downward pressure on ITRs on mobile capital, which is growing at increasing rates as far as economic integration increases; ii) the process of tax erosion gives rise to a corresponding process of increasing public sector decentralisation.

Democratic, Plutocratic and Social Weights in Price Indexes

Theoretical Economics Letters, 2012

This paper introduces social considerations into the calculation of the price index. To this purp... more This paper introduces social considerations into the calculation of the price index. To this purpose, recourse is made to the concept of distributional characteristic. It is shown how an aggregate price index can be expressed as a weighted average of commodityspecific prices, with weights that depend on both the aggregate share of consumption and the way in which consumption is distributed across households. The proposed index provides a complementary basis for the analysis of the impact of inflation and for the calculation of its social value.

The World Distribution of Income And Its Inequality, 1970-2009

Review of Income and Wealth, 2013

This paper provides a full decomposition of world inequality, as measured by the Gini coefficient... more This paper provides a full decomposition of world inequality, as measured by the Gini coefficient, in the period 1970-2009. In particular, using the Analysis of Gini (ANOGI), the paper describes the evolution of between inequality, within inequality, and the impact of overlapping on both factors. While there is evidence that between inequality in the last decade significantly declined due to the rapid Chinese growth, within inequality and overlapping went in the opposite direction. Furthermore, with the exception of some Asian countries, the rest of the world has not moved significantly. As a result, world inequality remains high by any standard.

UK Privatization and Household Welfare

FinanzArchiv, 2018

I wish to thank D. Newbery for his comments and for useful discussions on previous versions of th... more I wish to thank D. Newbery for his comments and for useful discussions on previous versions of this paper. The usual disclaimer applies. JEL CLASSIFICATION: D10 D60-KEYWORDS: Privatisation-household welfare società italiana di economia pubblica dipartimento di economia pubblica e territoriale-università di Pavia

Economic integration and government size: a review of the empirical literature

Financial Theory and Practice, 2011

How economic integration affects the vertical structure of the public sector

Economics of Governance, 2011

Abstract This paper investigates the impact of economic integration on the vertical structure of ... more

Economic Openness, Tax Erosion, and Decentralization: An Empirical Analysis

ABSTRACT The aim of this paper is to carry out an empirical investigation on the relation between... more ABSTRACT The aim of this paper is to carry out an empirical investigation on the relation between economic integration, tax erosion and the degree of public sector decentralisation in a sample of OECD countries. This paper addresses this topic by using economic integration as a way to &quot;open&quot; to external constraints the debate about the determinants of public sector decentralisation. Our empirical strategy is articulated in two stages. In the first stage we investigate the relation between Implicit Tax Rates (ITRs) on mobile capital and economic openness (EO). If this relation turns to be statistically significant, then we compute country-specific elasticities of ITR with respect to EO. In the second stage we will focus on the relation between these elasticities and the degree of decentralisation. The results of the analysis are encouraging. Evidence is provided that economic integration erodes effective tax rates on mobile capital, while producing no effect on other tax bases. Furthermore, the generated elasticities have some explanatory power in shaping the degree of decentralisation.

The Personal Income Tax in Italy: Why Does It Change?

Giornale degli Economisti, 2005

This paper analyses the effects of the personal income tax (PIT) changes implemented in Italy in ... more

The distributional and welfare impact of inflation in Italy

Working Papers, 2010

The entrance of Italy in the Euro area in 2001 has given rise to a wide debate about the percepti... more The entrance of Italy in the Euro area in 2001 has given rise to a wide debate about the perception of inflation on households' well-being. However, most of the debate has involved the measurement of the "correct" consumer price index at national level. Much less analysis has been ...

Towards a two-rate VAT in Italy: distributional and welfare effects

Cambridge Working Papers in Economics, 1998

This paper assesses the redistributive effects of two recent adjustments of indirect taxes in Ita... more

A Decomposition of the Personal Income Tax Changes in Italy: 1995–2000

FinanzArchiv: Public Finance Analysis, 2008

The effects of personal income tax changes are usually analyzed by comparing the inequality of in... more The effects of personal income tax changes are usually analyzed by comparing the inequality of income distributions before and after the tax policy change on a fixed pretax income distribution. This constant-population methodology aims at isolating the ''pure'' redistributive effect of the tax legislation. On the basis of the OECD's 1987 analysis, this paper proposes a methodology to disentangle the pure effect of tax changes from the influence of other nontax factors when the pretax income distribution is not fixed. For the Italian case, it is shown that the additional redistributive outcome displayed by changes of tax laws between 1995 and 2000 is only one-fourth of the total change of the redistributive impact in the same period and is outweighed by the effect of inflationary fiscal drag.