International Advances in Economic Research

, Volume 23, Issue 1, pp 9–20 | Cite as

The Sustainability of Italian Public Debt and Deficit



In this paper, we analyse the sustainability of Italian public debt using a unique database, reconstructed by Forte (2011), which covers the years 1862–2013. The study focuses on empirical tests for the sustainability and solvency of Italian public finance. The results of unit root and stationarity tests show that public debt and deficit variables are non-stationary at levels, but stationary in first-differences form, or I(1). However, some breaks in the series emerge, given internal and external crises (wars, oil shocks, regime changes, institutional reforms). Therefore, the empirical analysis is conducted for the entire period, as well as two sub-periods (1862–1913 and 1947–2013). In essence, the paper’s results reveal that Italy has sustainability problems in the Republican age (1947-2013). Our Markov-switching dynamic regression model indicates the existence of two distinct states, both for public debt and deficit, with means and standard deviations rather different. Both states are extremely persistent.


Public debt Public deficit Sustainability Time series Italy 

JEL Classification

C22 H11 H62 H63 O52 



Comments from the participants at the 81st International Atlantic Economic Conference (Lisbon, March 2016) are gratefully acknowledged. However, the usual disclaimer applies.

Supplementary material

11294_2016_9623_MOESM1_ESM.docx (31 kb)
ESM 1 (DOCX 31 kb)


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Copyright information

© International Atlantic Economic Society 2017

Authors and Affiliations

  1. 1.Department of Economics, Bryan School of Business and EconomicsUniversity of North CarolinaGreensboroUSA
  2. 2.Department of Political SciencesRoma Tre UniversityRomeItaly

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