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The dynamics of Italian public debt: alternative paths for fiscal consolidation

Author

Listed:
  • Paolo Casadio
  • Antonio Paradiso
  • B. Bhaskara Rao

Abstract

This article analyses possible targets for the Italian debt-to-GDP ratio with a small macroeconomic model. The role of international macroeconomic variables such as the US GDP growth, prices of raw materials, EUR/USD exchange rate and European Central Bank (ECB) monetary policy stance and domestic policy instruments is analysed in the debt dynamics. We find that external conditions play a fundamental role for the Italian fiscal consolidation. To reach a target of 100% of debt-to-GDP ratio by 2020, a further growth-sustaining policy has to be implemented.

Suggested Citation

  • Paolo Casadio & Antonio Paradiso & B. Bhaskara Rao, 2012. "The dynamics of Italian public debt: alternative paths for fiscal consolidation," Applied Economics Letters, Taylor & Francis Journals, vol. 19(7), pages 635-639, May.
  • Handle: RePEc:taf:apeclt:v:19:y:2012:i:7:p:635-639
    DOI: 10.1080/13504851.2011.591726
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    File URL: http://hdl.handle.net/10.1080/13504851.2011.591726
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    References listed on IDEAS

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    1. Carlo A. Favero & Massimiliano Marcellino, 2005. "Modelling and Forecasting Fiscal Variables for the Euro Area," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(s1), pages 755-783, December.
    2. Carlo A. Favero, "undated". "How do European monetary and fiscal authorities behave?," Working Papers 214, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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    Citations

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    Cited by:

    1. Kumar, Saten & Paradiso, Antonio, 2011. "Assessing Sustainability of the Irish Public Debt," MPRA Paper 35295, University Library of Munich, Germany.
    2. Nicholas Apergis & Arusha Cooray, 2013. "Forecasting fiscal variables: Only a strong growth plan can sustain the Greek austerity programs - Evidence from simultaneous and structural models," CAMA Working Papers 2013-25, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Esposito, Piero & Paradiso, Antonio & Rao, B. Bhaskara, 2011. "The dynamics of Spanish public debt and sustainable paths for fiscal consolidation," MPRA Paper 32563, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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