A Stagnant Economy

  • Pierluigi Ciocca


Inflation in Italy was gradually brought down during the 1980s and then almost completely eliminated in the second half of the 1990s. Since 1993 the current account of the balance of payments has been in surplus. The external debt was gradually reduced and Italy became a creditor country. Since 1995 the public debt, although still enormous, has shown a clear downward trend in relation to GDP. After it re-entered the EMS in 1996, the lira did not fluctuate significantly with respect to the other European currencies. Italy adopted the euro when it was introduced at the beginning of 1999. A ‘culture of stability’, which seemed lost, has revived.


Interest Rate Total Factor Productivity Euro Area Public Debt Average Annual Rate 
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  1. 3.
    G. Parigi and S. Siviero, An Investment-Function-Based Measure of Capacity Utilisation. Potential Output and Utilised Capacity in the Bank of Italy’s Quarterly Model, Temi di discussione no. 367, Banca d’Italia, Rome, 2000.Google Scholar
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    L. Spaventa and V. Chiorazzo, Astuzia o virtù? Come accadde che l’Italia fu ammessa all’Unione monetaria, Donzelli, Rome 2000. In this detailed account no reference is made to monetary policy, which played a key disinflationary role between 1994 and 1998.Google Scholar
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    Only a significant increase in the actual retirement age can permanently curb pension expenditure. To achieve such an increase, it may be necessary to supplement social security reforms with measures affecting the labour market. In this respect, see F. Modigliani and M. Ceprini, ‘Social Security Reform: A Proposal for Italy’, Reviewof Economic Conditions in Italy, 1998, pp. 177–201 and D. Franco, ‘Italy. A Never-Ending Pension Reform’, NBER-Kiel Institute Conference, Berlin, March 2000. At the same time only the full employment of a growing labour force can sustain pension expenditure, even if it is curbed. See A. Sen, ‘L’occupazione: le ragioni di una priorità per la politica economica’, in P. Ciocca (ed.), Disoccupazione di fine secolo. Studi e proposte per l’Europa, Bollati Boringhieri, Turin, 1997.Google Scholar
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© Pierluigi Ciocca 2005

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  • Pierluigi Ciocca

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