Financialisation and Economic and Financial Crises: The Case of Italy

This report on Italy examines the long-run changes between the financial and the real sectors of the economy, with a focus on the effects of financialization on the macroeconomic developments which drove to the 2007 financial crisis. The first part provides some analysis on the major GDP components and the financial balance pattern over the long period. The analysis allows to classify the nature of Italian growth as mainly consumer led type. The second part finds out the effects of an increasing dominance of finance since the beginning of the 1990s on income distribution, investment in capital stock, consumption and the current account. The third part links the long-run developments with the financial and economic crisis, showing how the consumer collapse and the public investment constraints explain how the recession is still charactering the Italian economy.