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Withdrawal of Italy from the Eurozone: stochastic simulations of a structural macroeconometric model

Author

Listed:
  • Alberto Bagnai

    (Department of Economics, Gabriele d'Annunzio University)

  • Brigitte Granville

    (Centre for Globalization Research , Queen Mary University of London)

  • Christian Alexander Mongeau Ospina

    (Department of Economics, Università ‘Gabriele D’Annunzio’)

Abstract

This paper assesses the impact on the Italian economy of withdrawal of Italy from the Eurozone, by means of the stochastic simulation of a macroeconometric model. The model considers the contractionary effects of devaluation, the evolution of sovereign debt spread and the development of bilateral economic relations between Italy and its major trade partners. The simulation results are consistent with the findings of recent applied research: the Italian economy would follow the V-shaped pattern observed in most currency crises. After an initial period of stress, it would recover and resume growth at a reasonable pace.

Suggested Citation

  • Alberto Bagnai & Brigitte Granville & Christian Alexander Mongeau Ospina, 2017. "Withdrawal of Italy from the Eurozone: stochastic simulations of a structural macroeconometric model," a/ Working Papers Series 1702, Italian Association for the Study of Economic Asymmetries, Rome (Italy).
    • Handle: RePEc:ais:wpaper:1702
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    References listed on IDEAS

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    Cited by:

    1. Malinen Tuomas & Nyberg Peter & Koskenkylä Heikki & Berghäll Elina & Mellin Ilkka & Miettinen Sami & Ala-Peijari Jukka & Törnqvist Stefan, 2018. "How to Leave the Eurozone: The Case of Finland," The Economists' Voice, De Gruyter, vol. 15(1), pages 1-16, December.
    2. Cagri Esener & Brigitte Granville & Roman Matousek, 2022. "Choosing the Optimal Tool for Fiscal Adjustment or Living under Fiscal Constraints: Panel Evidence from Selected OECD Countries," Economic Research Guardian, Weissberg Publishing, vol. 12(1), pages 2-29, June.

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    More about this item

    Keywords

    European economic and monetary union; ECB; balance of payment crisis; Target2; Euro.;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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