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What went wrong with Italy, and what the country should now fight for in Europe

Sergio Cesaratto () and Gennaro Zezza

No 37-2018, FMM Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: In this paper we briefly review the evolution of the Italian economy in the post-war period, discussing the shift from a first period when fiscal policy was targeted - among other things - at full employment, to a later period when controlling inflation through a "foreign discipline" became the main policy target. We review critically the literature on the Italian productivity slowdown, suggesting that it neglects the role of aggregate demand, and of labor market reforms, on productivity. Finally, we discuss Eurozone imbalances, suggesting that Eurozone institutions adopt new rules to keep the interest rate low enough to make public debt sustainable, while using fiscal policy to stimulate growth.

Keywords: Italy; stagnation; Eurozone; imbalances (search for similar items in EconPapers)
JEL-codes: E44 E52 E62 F45 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2018
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