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Public debt and growth in Italy:Analysis and policy proposals

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  • Daniele, SCHILIRO'

Abstract

The Italian economy is characterized by a considerable amount of public debt and low growth for over a decade. This is a key issue both at a theoretical and policy level. The relationship between public debt and economic growth is widely discussed in the economic literature, since in many countries spending is rising faster than income, leading to widening budget deficits and higher levels of debt. However, the empirical literature generally highlighted the heterogeneity of the debt-growth nexus. This paper summarizes four working papers written by the author in the period from 2007 to 2014, where the structural problems of the Italian economy are identified, and the critical aspects related to Italy high debt and its low growth is emphasized. The contribution aims at discussing possible policy actions to address the Italian structural problems in the current situation. In particular, the paper underlines the importance of a long-term strategy for growth, to boost productivity and the potential growth of the Italian economy. In addition, it focuses on fiscal policy emphasizing the strategic role both of spending optimization and of tax collections through, for instance, digitizing the tax collection process in order to contribute to the long-term sustainability of sovereign Italian debt.

Suggested Citation

  • Daniele, SCHILIRO', 2019. "Public debt and growth in Italy:Analysis and policy proposals," MPRA Paper 97950, University Library of Munich, Germany, revised Nov 2019.
  • Handle: RePEc:pra:mprapa:97950
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    File URL: https://mpra.ub.uni-muenchen.de/97950/1/MPRA_paper_97950.pdf
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    References listed on IDEAS

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    1. Panizza, Ugo & Presbitero, Andrea F., 2014. "Public debt and economic growth: Is there a causal effect?," Journal of Macroeconomics, Elsevier, vol. 41(C), pages 21-41.
    2. Olivier J. Blanchard & Daniel Leigh, 2013. "Growth Forecast Errors and Fiscal Multipliers," American Economic Review, American Economic Association, vol. 103(3), pages 117-120, May.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    4. Pierre Yared, 2019. "Rising Government Debt: Causes and Solutions for a Decades-Old Trend," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 115-140, Spring.
    5. Sara Calligaris & Massimo Del Gatto & Fadi Hassan & Gianmarco Ottaviano & Fabiano Schivardi, 2018. "Poor productivity: an Italian perspective," CentrePiece - The Magazine for Economic Performance 521, Centre for Economic Performance, LSE.
    6. Mahdavi, Saeid, 2004. "Shifts in the Composition of Government Spending in Response to External Debt Burden," World Development, Elsevier, vol. 32(7), pages 1139-1157, July.
    7. Ugo Panizza & Andrea F. Presbitero, 2013. "Public Debt and Economic Growth in Advanced Economies: A Survey," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 149(II), pages 175-204, June.
    8. Debrun, Xavier & Ostry, Jonathan D. & Willems, Tim & Wyplosz, Charles, 2019. "Public Debt Sustainability," CEPR Discussion Papers 14010, C.E.P.R. Discussion Papers.
    9. Beqiraj, Elton & Fedeli, Silvia & Forte, Francesco, 2018. "Public debt sustainability: An empirical study on OECD countries," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 238-248.
    10. Teles, Vladimir K. & Cesar Mussolini, Caio, 2014. "Public debt and the limits of fiscal policy to increase economic growth," European Economic Review, Elsevier, vol. 66(C), pages 1-15.
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    More about this item

    Keywords

    public debt; growth; single currency; debt sustainability; fiscal policy; structural reforms;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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