Italy in the Eurozone
Type
working paper
Date Issued
2020-07
Author(s)
Abstract (De)
Using a DSGE model with nominal wage rigidity, we investigate two scenarios for the Italian economy. The first considers sustained policy commitment to reform. The results indicate the possibility of `growing out of bad initial conditions', if fiscal consolidation is combined with a program for bank recovery and for competitiveness and growth. The second scenario involves a strong asymmetric recession. It is likely to be very severe under the restrictions of the currency union. A benign exit from the Eurozone with stable investor expectations could substantially dampen the short-run impact. Stabilization is achieved by monetary expansion, combined with exchange rate depreciation. However, investor panic may lead to escalation. Capital market reactions would offset the benefits of monetary autonomy and much delay the recovery.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Quantitative Economic Methods
Subject(s)
Eprints ID
257279
File(s)![Thumbnail Image]()
![Thumbnail Image]()
Name
ItalyTechnicalAppendix.pdf
Size
343.26 KB
Format
Adobe PDF
Checksum (MD5)
6f779d52d515bd4c40d23a591347d68c
Name
EWP-2010.pdf
Size
702.36 KB
Format
Adobe PDF
Checksum (MD5)
9fdda724f12911f864fec4884c8432c0