Cause dello squilibrio dei conti con l’estero dell’italia nei primi anni novanta e oneri del processo di aggiustamento - Causes of the Italian external deficit in the early nineties and burdens of the adjustment

In 1992 Italy was forced to leave the European Monetary System, because of large deficits in foreign transactions. The main cause had been the increase in the international diversification of investments while the average yield was nearly two percentage points higher on Italian foreign liabilities than on assets. In 1992 the burden of this difference was almost as large as Italian net imports of petroleum products. Between 1992 and 1995 Italy succeeded in halving net foreign liabilities cumulated in the previous 13 years. The primary burden of the adjustment, equal to the change in the balance of foreign trade in goods and services at current prices, was 4.2 per cent of gross domestic product. The deterioration of Italian terms of trade implied a secondary burden of about 2 per cent of GDP. At the same time deflation determined a loss of output of about 4 per cent of GDP. These facts seem to be in accordance with Mill’s and Keynes’s