A Note on the (Un)Pleasant Arithmetic of Fiscal Policy: The Case of Italian Public Debt
Using the simple arithmetic of government budget constraint, we perform an illustrative 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 per cent criterion for deficit/GDP ratio, as prescribed by SGP (Stability and Growth Pact). We perform a forecasting exercise under five alternative scenarios and analyse the details of a structural debt reduction strategy with alternative yearly step. Copyright 2009 The Authors Journal compilation 2009 Banca Monte dei Paschi di Siena SpA.
Year of publication: |
2009
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Authors: | Marattin, Luigi ; Marzo, Massimiliano |
Published in: |
Economic Notes. - Banca Monte dei Paschi di Siena SpA. - Vol. 38.2009, 3, p. 169-183
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Publisher: |
Banca Monte dei Paschi di Siena SpA |
Saved in:
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