 Embedded Macroeconomic Institutions: Italy's Fiscal U-Turn in the 1990s and BeyondJournal of Common Market Studies, 2015, vol. 53, issue 6, 1301-1318 Abstract: Short-term theories on the determinants of fiscal consolidation underestimate that fiscal regimes are as entrenched as any other institution of a political economy. The case of Italy's fiscal adjustment in the run-up to EMU is used to show that external constraints and well-functioning institutions may well be just auxiliary. The success factor in the country's macroeconomic stabilization was that competing socio-economic interests, while all in favour of disinflation, could eventually agree on the size and composition of the adjustment thanks to side-payments in the form of a devalued currency. These are unavailable under EMU, which explains why the fiscal reform momentum slowed down, notwithstanding EU fiscal rules. Domestic preference formation goes back a long way: it is associated with an incremental process of institutional change that started in 1981 with the enhanced independence of the Bank of Italy and continued with labour market and budget reform in the late 1980s. Date: 2015 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jcmkts:v:53:y:2015:i:6:p:1301-1318 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Common Market Studies is currently edited by Jim Rollo and Daniel Wincott More articles in Journal of Common Market Studies from Wiley Blackwell |
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