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Accounting for the Duality of the Italian Economy

Author

Listed:
  • Jesus Fernandez-Villaverde

    (University of Pennsylvania)

  • Dario Laudati

    (University of Southern California)

  • Lee Ohanian

    (University of California Los Angeles)

  • Vincenzo Quadrini

    (University of Southern California)

Abstract

After 162 years of political unification, Italy still displays large regional economic differences. In 2019, the per capita GDP of Lombardia was 39,700 euros, but Calabria's per capita GDP was only 17,300 euros. We build a two-region, two-sector model of the Italian economy to measure the wedges that could account for the differences in aggregate variables between the North and the South. We find that the largest driver of the regional disparity in per capita output is the difference in total factor productivity, followed by fiscal redistribution. These two factors, together, account for more than 70 percent of the output disparity between the North and the South. (Copyright: Elsevier)

Suggested Citation

  • Jesus Fernandez-Villaverde & Dario Laudati & Lee Ohanian & Vincenzo Quadrini, 2023. "Accounting for the Duality of the Italian Economy," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 50, pages 267-290, October.
    • Handle: RePEc:red:issued:23-143
    DOI: 10.1016/j.red.2023.07.009
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    References listed on IDEAS

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    8. Clough, Shepard B. & Livi, Carlo, 1956. "Economic Growth in Italy: An Analysis of the Uneven Development of North and South," The Journal of Economic History, Cambridge University Press, vol. 16(3), pages 334-349, September.
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    Cited by:

    1. Jesús Fernández-Villaverde & Gustavo Ventura & Wen Yao, 2023. "The Wealth of Working Nations," NBER Working Papers 31914, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Italian economy; macroeconomic wedges; regional fiscal redistribution; regional convergence;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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