Publications

2002
Alesina, Alberto, and Eliana La Ferrara. 2002. “Who Trusts Others?” Journal of Public Economics 85: 207-34. Abstract
Both individual experiences and community characteristics influence how much people trust each other. Using individual level data drawn from US localities we find that the strongest factors associated with low trust are: (i) a recent history of traumatic experiences; (ii) belonging to a group that historically felt discriminated against, such as minorities (blacks in particular) and, to a lesser extent, women; (iii) being economically unsuccessful in terms of income and education; (iv) living in a racially mixed community and/or in one with a high degree of income disparity. Religious beliefs and ethnic origins do not significantly affect trust. The role of racial cleavages leading to low trust is confirmed when we explicitly account for individual preferences on inter racial relationships: within the same community, individuals who express stronger feelings against racial integration trust relatively less the more racially heterogeneous the community is.
Article
Alesina, Alberto, and Beatrice Weder. 2002. “Do Corrupt Governments Receive Less Foreign Aid?” American Economic Review 92: 1126-37. Abstract
Critics of foreign aid programs argue that these funds often support corrupt governments and inefficient bureaucracies. Supporters argue that foreign aid can be used to reward good governments. This paper documents that there is no evidence that less corrupt governments receive more foreign aid. On the contrary, according to some measures of corruption, more corrupt governments receive more aid. Also, we could not find any evidence that an increase in foreign aid reduces corruption. In summary, the answer to the question posed in the title is 'no.'
Article
Alesina, Alberto, Robert Barro, and Silvana Tenreyro. 2002. “Optimal Currency Areas.” NBER Macroeconomic Annual 2002. Cambridge, MA: MIT Press: 301-55. Abstract
As the number of independent countries increases and their economies become more integrated, we would expect to observe more multi-country currency unions. This paper explores the pros and cons for different countries to adopt as an anchor the dollar, the euro, or the yen. Although there appear to be reasonably well-defined euro and dollar areas, there does not seem to be a yen area. We also address the question of how trade and co-movements of outputs and prices would respond to the formation of a currency union. This response is important because the decision of a country to join a union would depend on how the union affects trade and co-movements.
Article
Senso non Comune
Alesina, Alberto. 2002. Senso non Comune. Milan, Italy: EGEA, Università Bocconi Press. Website

In Italian

2001
Alesina, Alberto, and Robert Barro. 2001. “Dollarization.” American Economic Review, Papers and Proceedings 91: 381-85.
Article
Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote. 2001. “Why Doesn't the United States Have a European-Style Welfare State?” Brookings Paper on Economics Activity Fall: 187-278.
Article
Alesina, Alberto, Stephan Danninger, and Massimo Rostagno. 2001. “Redistribution Through Public Employment: The Case of Italy.” IMF Staff Papers 48: 447-73. Abstract
This paper examines the regional distribution of public employment in Italy. It documents two facts. The first is that public employment is used as a subsidy from the North to the less wealthy South. About half of the wage bill in the South of Italy can be identified as a subsidy. Both the size of public employment and the level of wages are used as a redistributive device. The second fact concerns the effects of subsidized public employment on individuals’ attitudes toward job search, education, “risk taking” activities, and so on. Public employment discourages the development of market activities in the South.
Article
Currency Unions
Alesina, Alberto, and Robert Barro. 2001. Currency Unions. Hoover Institution. Publisher's Version

Editor and author of one chapter and of Introduction

Alesina, Alberto, Olivier Blanchard, Jordi Gali, Francesco Giavazzi, and Harald Uhlig. 2001. Designing Macroeconomic Policy for Europe. London, UK: CEPR.
2000
Alesina, Alberto. 2000. “Comments on "The Political Business Cycle 25 Years Later" by A. Drazen .” NBER Macroeconomic Annual 2000, 217-24.
Alesina, Alberto, and Romain Wacziarg. 2000. “The Economics of Social Trust.” Disaffected Democracies, edited by S Pharr and R Putnam. Princeton, NJ: Princeton University Press.
Alesina, Alberto, and Howard Rosenthal. 2000. “Polarized Platforms and Moderate Policies with Checks and Balances.” Journal of Public Economics 75: 1-20. Abstract
In standard spatial models of elections, parties with policy preferences take divergent positions. Their platform positions are less separated than are the parties’ ideal policies. If policy is the result of an executive–legislative compromise, the policy preferences of the parties can be moderated by voter behavior. Divided government may result. Since parties anticipate the moderated outcomes, they have an added incentive to choose separated platforms. Consequently, divergence in platforms is greater than in the standard model, especially when uncertainty is high and the legislature more powerful than the executive. For some parameters, parties may even ‘posture’ by adopting platforms that are more extreme than their ‘true’ ideal points.
Article
Alesina, Alberto, and David Dollar. 2000. “Who Gives Foreign Aid to Whom and Why?” Journal of Economic Growth 5: 33-63. Website Abstract

This paper studies the pattern of allocation of foreign aid from various donors to receiving countries. We find considerable evidence that the direction of foreign aid is dictated by political and strategic considerations, much more than by the economic needs and policy performance of the recipients. Colonial past and political alliances are the major determinants of foreign aid. At the margin, however, countries that democratize receive more aid, ceteris paribus. While foreign aid flows respond more to political variables, foreign direct investments are more sensitive to economic incentives, particularly property rights in the receiving countries. We also uncover significant differences in the behavior of different donors.

Alesina, Alberto. 2000. “The Political Economy of the Budget Surplus in the US.” Journal of Economic Perspectives 14: 3-19.
Article
Alesina, Alberto, and Eliana La Ferrara. 2000. “Participation in Heterogeneous Communities.” Quarterly Journal of Economics 115: 847-904. Abstract
This paper studies what determines group formation and the degree of participation when the population is heterogeneous, both in terms of income and race or ethnicity. We are especially interested in whether and how much the degree of heterogeneity in communities influences the amount of participation in different types of groups. Using survey data on group membership and data on U. S. localities, we flnd that, after controlling for many individual characteristics, participation in social activities is significantly lower in more unequal and in more racially or ethnically fragmented localities. We also find that those individuals who express views against racial mixing are less prone to participate in groups the more racially heterogeneous their community is. These results are consistent with our model of group formation.
Article
Alesina, Alberto, Reza Baqir, and William Easterly. 2000. “Redistributive Public Employment.” Journal of Urban Economics 48: 219-41. Abstract
Politicians may use disguised' redistributive policies in order to circumvent opposition to explicit tax-transfer schemes. First, we present a theoretical model that formalizes this hypothesis; then we provide evidence that in US cities, politicians use public employment as such a redistributive device. We find that city employment is significantly higher in cities where income inequality and ethnic fragmentation are higher.
Article
Alesina, Alberto, Enrico Spolaore, and Romain Wacziarg. 2000. “Economic Integration and Political Disintegration.” American Economic Review 90: 1276-96. Abstract
Trade liberalization and political separatism go hand in hand. In a world of trade restrictions, large countries enjoy economic benefits because political boundaries determine the size of the market. In a world of free trade and global markets even relatively small cultural, linguistic or ethnic groups can benefit from forming small and homogeneous political jurisdictions that trade peacefully and are economically integrated with others. This paper provides a formal model of the relationship between openness and the equilibrium number and size of countries, and successfully tests two implications of the model. The first one is that the economic benefits of country size depend on and are mediated by the degree of openness to trade. The second is that the history of Nation-State creations and secessions is influenced by the trade regime.
Article

Reprinted in R. Pornfret (2004), Economic Analysis of Regional Trading Agreements, Edward Elgar, UK.

1999
Alesina, Alberto, and Roberto Perotti. 1999. “Budget Deficits and Budget Institutions.” Fiscal Institutions and Fiscal Performance, edited by J Poterba and J von Hagen, 13-36. Chicago, IL: University of Chicago Press and NBER.
Alesina, Alberto. 1999. “Too Large and Too Small Governments.” Economic Policy and Equity, edited by V Tanzi, Ke-Young Chu, and S Gupta. Washington, DC: International Monetary Fund.
Alesina, Alberto, Ricardo Hausmann, Rudolf Hommes, and Ernesto Stein. 1999. “Budget Institutions and Fiscal Performance in Latin America.” Journal of Development Economics 59: 233-53.

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