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Italy: Toward a Growth-Friendly Fiscal Reform

Author

Listed:
  • Michal Andrle
  • Mr. Alvar Kangur
  • Mr. Mehdi Raissi
  • Mr. Shafik Hebous

Abstract

Published in late 2017, the Italian medium-term fiscal plan aims to achieve structural balance by 2020, although concrete, high-quality measures to meet the target are yet to be specified. This paper seeks to contribute to the discussion by (i) assessing spending patterns to identify areas for savings; (ii) evaluating the pension system; (iii) analyzing the scope for revenue rebalancing; and (iv) putting forward a package of spending cuts and tax rebalancing that is growth friendly and inclusive, could have limited near-term output costs, and would achieve a notable reduction in public debt over the medium term. Such a package could help the authorities balance the need to bring down public debt and, thus, reduce vulnerabilities while supporting the economic recovery.

Suggested Citation

  • Michal Andrle & Mr. Alvar Kangur & Mr. Mehdi Raissi & Mr. Shafik Hebous, 2018. "Italy: Toward a Growth-Friendly Fiscal Reform," IMF Working Papers 2018/059, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2018/059
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    Cited by:

    1. Carlo Mazzaferro, 2018. "Is the Italian NDC pension system really sustainable?Parameters’ design and consistency," Center for the Analysis of Public Policies (CAPP) 0164, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    2. Paolo Caro, 2020. "Decomposing Personal Income Tax Redistribution with Application to Italy," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(1), pages 113-129, March.
    3. Daniele Franco & Pietro Tommasino, 2020. "Lessons From Italy: A Good Pension System Needs an Effective Broader Social Policy Framework," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(2), pages 73-81, March.

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    More about this item

    Keywords

    WP; tax credit; internal rate of return; public spending; tax burden; Growth-friendly fiscal policy; public pensions; dynamic stochastic general equilibrium models; Italy; early retirement; low income; stability law; nominal wage; IP regime; retirement age; potential GDP; rationalizing tax expenditure; public education expenditure gap; local government; replacement rate; Pension spending; Pensions; Retirement; Tax allowances; Wages; Global;
    All these keywords.

    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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