PhD defence F. (Francesco) Mazzola

Below is a brief summary about the dissertation:

Investment, production, and consumption decisions of agents may affect other agents who are outside of the transaction, thereby imposing an externality on them. Agents exposed to externalities often internalize these externalities in their decision-making process. For example, investors that would absorb price spillovers on their assets may have incentives to incorporate the likelihood of future externalities in their ex-ante portfolio decisions. This rational internalization has important implications since it would relieve markets from excessive fire sales going forward, but may also lead to inefficient outcomes (e.g., under-diversified portfolios). The existence of externalities and associated economic inefficiency also makes a case for policy intervention. Depending on the nature of the externality, the Government may decide to intervene to prevent individually rational, but socially wasteful behavior, thereby generating benefits for market participants and for society. If governmental bodies have limited scope, the positive effects of a policy can even indirectly spill over to other assets or other agents not directly supervised by the authority, in which case coordination between policymakers in different jurisdictions would further increase efficiency. 
This dissertation includes three chapters. In Chapter 2, I explore how the risk of future collateral fire sales affects lending decisions. In Chapter 3, I examine how technology can make the collateral liquidation process more efficient, as well as the indirect consequences it may have on other assets. In Chapter 4, I study the effectiveness of government interventions in containing negative externalities during the COVID 19 outbreak in Italy. Final remarks conclude in Chapter 5.