The Macroeconomics of Europe 2020 Reform Strategy and the Potential Effects on the Italian Economy

Barbara Annicchiarico (), Fabio Di Dio () and Francesco Felici

No 8, Working Papers from Department of the Treasury, Ministry of the Economy and of Finance

Abstract: This paper studies the potential effects on the Italian economy of various reform packages in the spirit of the Europe 2020 strategy. Using the European Commission’s model QUEST III with R&D calibrated to match important features of the Italian economy, we provide a quantitative assessment of the possible effects in terms of growth, employment, sustainability of public finances and external imbalances of several knowledge-oriented, labor and product market reforms. We observe that labor market reforms are likely to bring about sizable long-run gains in output and employment and that most of these gains accrue to low skilled workers, while real wages tend to increase especially for high skilled workers. Some interventions are likely to have some transitional costs as they give rise to a temporary decline in consumption and/or employment, but the simultaneous implementation of all reforms may tend to mitigate these effects already in the medium run. As a result of higher growth, in the no costly reform scenarios, the public debt-to-GDP ratio declines substantially. However, the analysis shows that non-budget neutral structural reforms may have considerable side effects on the external imbalances.

Keywords: Europe 2020; Structural Reforms; Simulation Analysis; Italy (search for similar items in EconPapers)
JEL-codes: E10 E47 E60 (search for similar items in EconPapers)
Pages: 36
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.dt.tesoro.it/export/sites/sitodt/module ... N_8_OTTOBRE_2011.pdf (application/pdf)

Related works:
Working Paper: The macroeconomics of Europe 2020 reform strategy and the potential effects on Italian economy (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:itt:wpaper:wp2011-8

Access Statistics for this paper

More papers in Working Papers from Department of the Treasury, Ministry of the Economy and of Finance Contact information at EDIRC.
Bibliographic data for series maintained by Michele Petrocelli ( this e-mail address is bad, please contact ).