Marattin, Luigi and Marzo, Massimiliano (2008): An (Un)Pleasant Arithmetic of Fiscal Policy: the Case of Italian Public Debt.
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Using the simple arithmetic of government budget constraint, we perform an analysis on the Italian case, investigating the consequences on the main public finance aggregates of the adoption of a fiscal policy rule responding to past real debt/GDP ratio. Such a rule, firmly grounded in the economic analysis, would allow the reduction of Italy's outstanding stock of debt without requiring the strict adherence to the 3% criterion for deficit/GDP ratio, as prescribed by SGP. We perform a forecasting exercise under five alternative scenarios, analyze the details of a structural debt reduction strategy with alternative yearly step, and finally carry out a counterfactual exercise by applying our proposed rule to the period 1994-2006.
|Item Type:||MPRA Paper|
|Original Title:||An (Un)Pleasant Arithmetic of Fiscal Policy: the Case of Italian Public Debt|
|Keywords:||fiscal consolidation, public debt reduction, fiscal policy|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination
|Depositing User:||Luigi Marattin|
|Date Deposited:||25. Jan 2008 19:32|
|Last Modified:||08. Jan 2014 13:38|