MARIO BALDASSARRI is Professor of Economics at the University of Rome La Sapienza, Italy. He was the Managing Editor of the Rivista di Politica Economica between 1989 and 2001 and has written extensively on growth, fiscal policy and labour markets. - LUCA LAMBERTINI is Professor of Political Economy in the department of Economics, University of Bologna, Italy. He has also been research fellow at the Institute of Economics and CIE, University of Copenhagen. He has contributed to the Journal of Economic Theory, Journal of Economic Dynamics and Control, and the Journal of Industrial Economics and Economics Letters.