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Withdrawal of Italy from the Eurozone: stochastic simulations of a structural macroeconometric model

Alberto Bagnai (), Brigitte Granville () and Christian Alexander Mongeau Ospina

No 1702, a/ Working Papers Series from Italian Association for the Study of Economic Asymmetries, Rome (Italy)

Abstract: This paper assesses the impact on the Italian economy of withdrawal of Italy from the Eurozone, by means of the stochastic simulation of a macroeconometric model. The model considers the contractionary effects of devaluation, the evolution of sovereign debt spread and the development of bilateral economic relations between Italy and its major trade partners. The simulation results are consistent with the findings of recent applied research: the Italian economy would follow the V-shaped pattern observed in most currency crises. After an initial period of stress, it would recover and resume growth at a reasonable pace.

Keywords: European economic and monetary union; ECB; balance of payment crisis; Target2; Euro. (search for similar items in EconPapers)
JEL-codes: E11 E12 E42 E58 F32 F33 F34 F36 N24 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2017-04
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