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Temporary measures in Italy: buying or losing time?

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  • Sandro Momigliano

    (Bank of Italy, Structural Economic Analysis Department, Public Finance Division.)

  • Pietro Rizza

    (Bank of Italy, Structural Economic Analysis Department, Public Finance Division.)

Abstract

In this paper we examine the effects of temporary measures on the Italian budget in the period 1997-2006 and assess their appropriateness. We also analyse the role of extraordinary operations which reduced the level of public debt in the same time frame while leaving the net worth of the public sector broadly unchanged. Our analysis suggests that temporary measures and extraordinary operations were used mainly to comply formally with EU fiscal rules without incurring the economic and political costs of more structural adjustment. Policy-makers bought time in a worsening cyclical context, expecting the recovery to be imminent. Ex post information reveals that the timing of this strategy was wrong. In a broader temporal perspective, the use of extraordinary operations has made it possible to postpone more permanent actions which would have improved the sustainability of Italian public finances. It is difficult not to conclude that precious time has been lost designing an equitable distribution across generations of the expected costs of the upcoming demographic transition.

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Bibliographic Info

Article provided by Magyar Nemzeti Bank (the central bank of Hungary) in its journal MNB Conference Volume.

Volume (Year): 1 (2007)
Issue (Month): 1 (December)
Pages: 61-71

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Handle: RePEc:mnb:confer:v:1:y:2007:i:1:p:61-71

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Related research

Keywords: temporary measures; economic cycle; budgetary policies.;

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  1. Fabrizio Balassone & Daniele Franco & Stefania Zotteri, 2007. "The Reliability of EMU FIscal Indicators: Risks and Safeguards," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 633, Bank of Italy, Economic Research and International Relations Area.
  2. Das-Gupta, Arindam & Mookherjee, Dilip, 1996. "Tax Amnesties as Asset-Laundering Devices," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 12(2), pages 408-31, October.
  3. Marco Buti & Jo�o Nogueira Martins & Alessandro Turrini, 2007. "From Deficits to Debt and Back: Political Incentives under Numerical Fiscal Rules," CESifo Economic Studies, CESifo, CESifo, vol. 53(1), pages 115-152, March.
  4. Alm, James & Beck, William, 1993. "Tax Amnesties and Compliance in the Long Run: A Time Series Analysis," National Tax Journal, National Tax Association, vol. 46(1), pages 53-60, March.
  5. Andreoni, James, 1991. "The desirability of a permanent tax amnesty," Journal of Public Economics, Elsevier, Elsevier, vol. 45(2), pages 143-159, July.
  6. Chu, C. Y. Cyrus, 1990. "Plea bargaining with the irs," Journal of Public Economics, Elsevier, Elsevier, vol. 41(3), pages 319-333, April.
  7. Nicola Sartor & Laurence J. Kotlikoff & Willi Leibfritz, 1999. "Generational Accounts for Italy," NBER Chapters, in: Generational Accounting around the World, pages 299-324 National Bureau of Economic Research, Inc.
  8. Cassone, Alberto & Marchese, Carla, 1995. "Tax Amnesties as Special Sales Offers: The Italian Experience," Public Finance = Finances publiques, , , vol. 50(1), pages 51-66.
  9. Dubin, Jeffrey A & Graetz, Michael J & Wilde, Louis L, 1992. "State Income Tax Amnesties: Causes," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(3), pages 1057-70, August.
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Cited by:
  1. Antonio Bassanetti & Matteo Bugamelli & Sandro Momigliano & Roberto Sabbatini & Francesco Zollino, 2013. "The policy response to macroeconomic and fiscal imbalances in Italy in the last fifteen years," Questioni di Economia e Finanza (Occasional Papers) 211, Bank of Italy, Economic Research and International Relations Area.
  2. Gábor P. Kiss, 2007. "One-off and off-budget items: An alternative approach," MNB Conference Volume, Magyar Nemzeti Bank (the central bank of Hungary), Magyar Nemzeti Bank (the central bank of Hungary), vol. 1(1), pages 18-27, December.

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