Academic Year 2012-2013
Alessandra Casella is professor of Economics at Columbia University and Research Associate of the National Bureau of Economic Research (Cambridge, Ma) and the Center for Economic Policy Research (London, UK). After studying at Universita’ Bocconi in Italy, she received her PhD in Economics from MIT in 1989, and taught at UC Berkeley before moving to Columbia in 1993. From 1996 to 2010, she was also Directeur d’ Etudes at the Ecole de Hautes Etudes en Sciences Sociales (EHESS, Paris).
Her main research interests are in international economics, public economics and political economy. Casella’s work has appeared in the main academic journals (the American Economic Review, the Journal of Political Economy, the Review of Economic Studies). Her proposal for a system of Tradable Deficit Permits in the European Union has been widely studied and was briefly implemented in Austria to discipline the creation of domestic debt. Her book Storable Votes: Protecting the Minority Voice (Oxford University Press) was published in December 2011.
She has received numerous fellowships; in particular, she has been a Russell Sage Fellow, a Member of the Institute of Advanced Studies in Princeton, and a Guggenheim Fellow. Further information on Professor Cassella can be found here.
Individual Incentives and Public Policy: Applications to Voting and Very Tentative Thoughts about Migration
The increased interdependence of economies and societies requires increased interaction and coordination in decision-making. Very soon, stricter cooperation will be required between nations with very different cultures. Even in the relative homogeneity of the European Union, however, the problem is difficult. In the economic front the failures are very clear: coordination has failed because the tools employed to achieve it have lacked credibility. They have been either too blunt—as in the case of the automatic fiscal penalties promised by the Stability Pact—or non-transparent—as in the case of the endless political negotiations—and thus exasperating to markets that demand clarity and certainty. The costs have been large and may still become even larger.
My work tries to identify governance mechanisms that facilitate coordination by creating credible incentives. Remaining in the sphere of European fiscal policy, Tradable Deficit Permits recognize the fundamental externality that ties the fiscal policies of a monetary union and proposes to address it with the tools employed in environmental policy. Contrary to all current proposals, the system would reward fiscal discipline, encourage long term fiscal balances and impose costs for fiscal laxity that reflect the markets view of the danger to the stability of the union. In the field of voting rights in international organizations, Storable Votes allow members to store votes by abstaining on some decisions and casting more than one vote on issues that matter to them most. The voting scheme combines transparency, rapid decision-making, and the right of member countries to reject proposals they consider unacceptable, even when they find themselves in the minority. The traditional answer has been a system of vetoes, but vetoes are cumbersome and inefficient.
In my year at the Straus Institute, I plan to apply the same logical models to the design of a coordinated international policy on immigration. Of course, these ideas may well fail, but the crucial importance of the topic and the inadequacy of the current policies encourage some bold effort at a new approach.