IDEAS home Printed from https://ideas.repec.org/a/spr/italej/v1y2015i1p25-59.html
   My bibliography  Save this article

Growth and Cycles of the Italian Economy Since 1861: The New Evidence

Author

Listed:
  • Fabio Clementi

    ()

  • Marco Gallegati
  • Mauro Gallegati

Abstract

Based on a newly-available large set of historical national accounts, the paper revisits the main features of economic growth and cycles in Italy for the post-Unification period 1861–2011. Alongside the structural changes in growth dynamics, the main sources of output and productivity growth are identified. As regards the analysis of the underlying cyclical component, a business cycle chronology is first established and then both the specific patterns of individual cycles and the co-movements of output with key macroeconomic variables are investigated. In the 150 years since its political Unification, Italy’s economic growth was mainly propelled by consumption and investments, whereas on the supply side the industry and services sectors were by far the main contributors, also because of the positive effect of labour reallocation to nonfarm activities. Over the same period, Italy experienced approximately 20 business cycles of varying duration and amplitude. Output fluctuations were dominated by the short-term variability of agricultural production before World War II and by fluctuations of the industry sector thereafter. The cyclical behaviour exhibited by aggregate demand components conforms quite well to that evidenced in the standard international business cycle literature, although some exceptions arise in the pre-World War II years. Copyright Società Italiana degli Economisti (Italian Economic Association) 2015

Suggested Citation

  • Fabio Clementi & Marco Gallegati & Mauro Gallegati, 2015. "Growth and Cycles of the Italian Economy Since 1861: The New Evidence," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(1), pages 25-59, March.
  • Handle: RePEc:spr:italej:v:1:y:2015:i:1:p:25-59
    DOI: 10.1007/s40797-014-0005-0
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s40797-014-0005-0
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jianmin Tang & Weimin Wang, 2004. "Sources of aggregate labour productivity growth in Canada and the United States," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 421-444, May.
    2. Christian Kleiber & Achim Zeileis, 2005. "Validating multiple structural change models-a case study," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(5), pages 685-690.
    3. Gaffeo, Edoardo & Gallegati, Mauro & Giulioni, Gianfranco & Palestrini, Antonio, 2003. "Power laws and macroeconomic fluctuations," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 408-416.
    4. Zeileis, Achim & Leisch, Friedrich & Hornik, Kurt & Kleiber, Christian, 2002. "strucchange: An R Package for Testing for Structural Change in Linear Regression Models," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 7(i02).
    5. Sichel, Daniel E, 1993. "Business Cycle Asymmetry: A Deeper Look," Economic Inquiry, Western Economic Association International, vol. 31(2), pages 224-236, April.
    6. Zeileis, Achim & Kleiber, Christian & Kramer, Walter & Hornik, Kurt, 2003. "Testing and dating of structural changes in practice," Computational Statistics & Data Analysis, Elsevier, vol. 44(1-2), pages 109-123, October.
    7. Claire Giordano & Francesco Zollino, 2015. "A Historical Reconstruction of Capital and Labour in Italy, 1861-2013," Rivista di storia economica, Società editrice il Mulino, issue 2, pages 155-224.
    8. Zamagni, Vera, 1997. "The Economic History of Italy 1860-1990," OUP Catalogue, Oxford University Press, number 9780198292890.
    9. Alberto Baffigi & Maria Elena Bontempi & Roberto Golinelli, 2013. "Potential Output, Output Gap, and Inflation in Italy in the Long Term (1861-2010): An Econometric Analysis," Quaderni di storia economica (Economic History Working Papers) 29, Bank of Italy, Economic Research and International Relations Area.
    10. Broadberry, Stephen & Giordano, Claire & Zollino, Francesco, 2011. "A Sectoral Analysis of Italy's Development: 1861 -2010," CAGE Online Working Paper Series 62, Competitive Advantage in the Global Economy (CAGE).
    11. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
    12. Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1, March.
    13. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-856, July.
    14. Ciccarelli, Carlo & Fenoaltea, Stefano, 2007. "Business fluctuations in Italy, 1861-1913: The new evidence," Explorations in Economic History, Elsevier, vol. 44(3), pages 432-451, July.
    15. Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375.
    16. Gerhard Bry & Charlotte Boschan, 1971. "Foreword to "Cyclical Analysis of Time Series: Selected Procedures and Computer Programs"," NBER Chapters, in: Cyclical Analysis of Time Series: Selected Procedures and Computer Programs, pages -1, National Bureau of Economic Research, Inc.
    17. Stefano Fenoaltea, 2005. "La crescita economica dell'Italia postunitaria: le nuove serie storiche," Rivista di storia economica, Società editrice il Mulino, issue 2, pages 91-122.
    18. Mattesini, Fabrizio & Quintieri, Beniamino, 1997. "Italy and the Great Depression: An Analysis of the Italian Economy, 1929-1936," Explorations in Economic History, Elsevier, vol. 34(3), pages 265-294, July.
    19. Giannini, Carlo & Lanzarotti, Antonio & Seghelini, Mario, 1995. "A traditional interpretation of macroeconomic fluctuations: The case of Italy," European Journal of Political Economy, Elsevier, vol. 11(1), pages 131-155, March.
    20. Andrews, Donald W K & Ploberger, Werner, 1994. "Optimal Tests When a Nuisance Parameter Is Present Only under the Alternative," Econometrica, Econometric Society, vol. 62(6), pages 1383-1414, November.
    21. Schlitzer, Giuseppe, 1996. "Business cycles in Italy: A statistical investigation," European Journal of Political Economy, Elsevier, vol. 11(4), pages 683-698, April.
    22. Rappoport, Peter & Reichlin, Lucrezia, 1989. "Segmented Trends and Non-stationary Time Series," Economic Journal, Royal Economic Society, vol. 99(395), pages 168-177, Supplemen.
    23. Wright, Ian, 2005. "The duration of recessions follows an exponential not a power law," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 345(3), pages 608-610.
    24. Ormerod, Paul & Mounfield, Craig, 2001. "Power law distribution of the duration and magnitude of recessions in capitalist economies: breakdown of scaling," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 293(3), pages 573-582.
    25. Fenoaltea, Stefano, 2005. "The growth of the Italian economy, 1861–1913: Preliminary second-generation estimates," European Review of Economic History, Cambridge University Press, vol. 9(3), pages 273-312, December.
    26. Di Guilmi, Corrado & Gaffeo, Edoardo & Gallegati, Mauro, 2004. "Empirical results on the size distribution of business cycle phases," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 333(C), pages 325-334.
    27. P. Onofri & P. Paruolo & B. Salituro, 1992. "Sulle fonti delle fluttuazioni dell'economia italiana: una analisi con sistemi VAR strutturali," Working Papers 139, Dipartimento Scienze Economiche, Universita' di Bologna.
    28. Gerhard Bry & Charlotte Boschan, 1971. "Cyclical Analysis of Time Series: Selected Procedures and Computer Programs," NBER Books, National Bureau of Economic Research, Inc, number bry_71-1, March.
    29. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    30. Giovanni Federico, 2003. "Le nuove stime della produzione agricola italiana, 1860-1910: primi risultati e implicazioni," Rivista di storia economica, Società editrice il Mulino, issue 3, pages 359-382.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mariateresa Ciommi & Andrea Gentili & Barbara Ermini & Chiara Gigliarano & Francesco M. Chelli & Mauro Gallegati, 2017. "Have Your Cake and Eat it Too: The Well-Being of the Italians (1861–2011)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(2), pages 473-509, November.
    2. Silvana Bartoletto & Bruno Chiarini & Elisabetta Marzano & Paolo Piselli, 2017. "Business Cycles, Credit Cycles, and Bank Holdings of Sovereign Bonds: Historical Evidence for Italy 1861-2013," Quaderni di storia economica (Economic History Working Papers) 43, Bank of Italy, Economic Research and International Relations Area.
    3. Silvana Bartoletto & Bruno Chiarini & Elisabetta Marzano & Paolo Piselli, 2015. "Business Cycles, Credit Cycles and Bank Holdings of Sovereign Bonds: Historical Evidence for Italy 1861-2013," CESifo Working Paper Series 5318, CESifo.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Baffigi, Alberto & Bontempi, Maria Elena & Felice, Emanuele & Golinelli, Roberto, 2015. "The changing relationship between inflation and the economic cycle in Italy: 1861–2012," Explorations in Economic History, Elsevier, vol. 56(C), pages 53-70.
    2. Riccardo De Bonis & Andrea Silvestrini, 2014. "The Italian financial cycle: 1861-2011," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 8(3), pages 301-334, September.
    3. Abhijit Sharma & Kelvin G Balcombe & Iain M Fraser, 2009. "Non-renewable resource prices: Structural breaks and long term trends," Economics Bulletin, AccessEcon, vol. 29(2), pages 805-819.
    4. Christian Aßmann & Jens Hogrefe & Roman Liesenfeld, 2009. "The decline in German output volatility: a Bayesian analysis," Empirical Economics, Springer, vol. 37(3), pages 653-679, December.
    5. M Sensier & D van Dijk, 2001. "Short-term Volatility Versus Long-term Growth: Evidence in US Macroeconomic Time Series," The School of Economics Discussion Paper Series 0103, Economics, The University of Manchester.
    6. Candelon, Bertrand & Piplack, Jan & Straetmans, Stefan, 2008. "On measuring synchronization of bulls and bears: The case of East Asia," Journal of Banking & Finance, Elsevier, vol. 32(6), pages 1022-1035, June.
    7. Jung, R.C. & Maderitsch, R., 2014. "Structural breaks in volatility spillovers between international financial markets: Contagion or mere interdependence?," Journal of Banking & Finance, Elsevier, vol. 47(C), pages 331-342.
    8. Quast, Josefine & Wolters, Maik H., 2019. "Reliable Real-time Output Gap Estimates Based on a Modified Hamilton Filter," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203535, Verein für Socialpolitik / German Economic Association.
    9. Kholodilin Konstantin Arkadievich & Siliverstovs Boriss, 2006. "On the Forecasting Properties of the Alternative Leading Indicators for the German GDP: Recent Evidence," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(3), pages 234-259, June.
    10. Roger Alejandro Banegas-Rivero, 2016. "Business Cycle, Asymmetries and non-linearity in Bolivia, 1950-2015. Ciclos económicos, asimetrías y no-linealidades en Bolivia, 1950-2015," Working Papers, Documentos de trabajo, Centro de Desarrollo Economico y Social (CEDES). 201609, Instituto de Investigaciones Económicas y Sociales 'Jose Ortiz Mercado' (IIES-JOM), Facultad de Ciencias Economicas, Administrativas y Financieras, Universidad Autonoma Gabriel Rene Moreno.
    11. Meller, Barbara & Metiu, Norbert, 2015. "The synchronization of European credit cycles," Discussion Papers 20/2015, Deutsche Bundesbank.
    12. Campolieti, Michele, 2019. "The durations of recession and prosperity: What distribution do they follow?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 534(C).
    13. Christian Kleiber & Achim Zeileis, 2005. "Validating multiple structural change models-a case study," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(5), pages 685-690.
    14. Camilo Alberto Cárdenas-Hurtado & María Alejandra Hernández-Montes, 2019. "Understanding the Consumer Confidence Index in Colombia: A structural FAVAR analysis," Borradores de Economia 1063, Banco de la Republica de Colombia.
    15. Frijns, Bart & Indriawan, Ivan & Otsubo, Yoichi & Tourani-Rad, Alireza, 2019. "The cost of trading during Federal Funds Rate announcements: Evidence from cross-listed stocks," International Review of Economics & Finance, Elsevier, vol. 60(C), pages 176-187.
    16. Zeileis, Achim & Kleiber, Christian & Kramer, Walter & Hornik, Kurt, 2003. "Testing and dating of structural changes in practice," Computational Statistics & Data Analysis, Elsevier, vol. 44(1-2), pages 109-123, October.
    17. Bataa, Erdenebat, 2012. "The Composite Leading Indicator of Mongolia," MPRA Paper 72415, University Library of Munich, Germany.
    18. Carsten J. Crede, 2015. "A structural break cartel screen for dating and detecting collusion," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2015-11, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    19. Njindan Iyke, Bernard, 2015. "Asymmetries, Structural Breaks, and Nonlinear Persistence: Evidence and Implications for Uncovering the Energy-Growth Nexus in Selected African Countries," MPRA Paper 67163, University Library of Munich, Germany.
    20. Dean Fantazzini, 2014. "Nowcasting and Forecasting the Monthly Food Stamps Data in the US Using Online Search Data," PLOS ONE, Public Library of Science, vol. 9(11), pages 1-27, November.

    More about this item

    Keywords

    Italy; National accounts; Growth and fluctuations; N13; N14;
    All these keywords.

    JEL classification:

    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:italej:v:1:y:2015:i:1:p:25-59. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Springer Nature Abstracting and Indexing). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.