Caggiano Emanuele, and Paweł Tokarski. “PD and M5S: the Italian alliance of convenience; the power of the status quo in a challenging economic context.” (2019): 4.

The attempt to provoke early elections in August 2019 by the leader of the League, Matteo Salvini, unexpectedly led to a pragmatic coalition of the Five-Star Movement (M5S) and the Democratic Party (PD) and the formation of a second government under Giuseppe Conte. This government operates in a fragile political equilibrium where a fear of early elections, which could pave the way for Matteo Salvini to power, is the main stabilising factor. The pragmatic political calculation of the PD and M5S sup­ported by Matteo Renzi’s new party “Italia Viva” may be enough to maintain the coali­tion for a certain time, but it will not generate any major growth incentives for Italy, which are crucial in maintaining the sustainability of public debt.

Work in Progress:

Caggiano Emanuele and Lorenzo Rocco. “Lobbying in the US: companies’ reaction to an unexpected political change

We study the reasons behind firms’ decision to finance politics. We formulate two hypotheses under which firms decide to spend resources in political activity: rent-seeking and insurance to avoid erratic policies. We test the first hypothesis based on the data, finding no significant effect on profits and returns of prior spending for political activity. To test the second hypothesis, we created an insurance/ex-post-mitigation model and tested its prediction using an event study framework. We found that uninsured firms increased spending on lobbying after Trump’s election in 2016. As a robustness check, we also tested this prediction in the previous two Obama elections, without obtaining significant results. These results suggest that an unexpected political change involves firms in strengthening political connections.

Caggiano Emanuele and Luisa Corrado. “Measuring the Effects of European Central Bank Communication using Speeches”

This paper, using textual analysis, studies the effect of the European Central Bank’s board members’ speeches on Eurozone government bonds yields from the beginning of 1999 to October 2019 using a novel dataset recently released by the ECB. It develops an automated methodology by applying a lexicon-approach to evaluate each speech objectively. The results find evidence of communication effects by ECB board members on bond interest rates for all maturities. By defining polarised sentiments aroused after the different speeches, the study also investigates which speaker has been more efficient in communicating the ECB strategies and in reassuring financial markets.