We test whether the sharp increase in sovereign spreads of euro area countries with respect to Germany after the explosion of the Greek crisis was due to deteriorating macroeconomic and fiscal fundamentals or to some form of financial contagion. Our analysis includes indicators of domestic and...

The volume collects the essays presented at the 15th Workshop on Public Finance organised by Banca d'Italia in Perugia from 4 to 6 April 2013. The workshop focused on the link between fiscal policy and macroeconomic imbalances and comprised four sessions. The first session concentrated on the...

Financial innovation has increased opportunities for diversification and lowered investment costs, but has not reduced the relative cost of active (informed) investment strategies compared with passive (less informed) strategies. What are the consequences? I have studied an economy with linear...

This paper shows how credit quality transition matrices of loans to Italian firms changed during a cyclical downturn (2008-09), compared with a previous time of growth (2006-07). Once transition matrices were linked to interest rates, banks appear to have been remarkably able at calibrating...

When do financial markets help in predicting economic activity? With incomplete markets, the link between financial and real economy is state-dependent and financial indicators may turn out to be useful particularly in forecasting "tail" macroeconomic events. We examine this conjecture by...

In this paper we investigate the main features of the Italian financial cycle, extracted by means of a structural trend-cycle decomposition of the credit-to-GDP ratio, using annual observations from 1861 to 2011. In order to draw conclusions based on solid historical data, we provide a thorough...

The volume collects the essays presented at the 14th Workshop on Public Finance organised by Banca d'Italia in Perugia from 29 to 31 March 2012. The workshop focused on the interaction between fiscal policy and growth and was organised in four sessions. The first session dealt with the...

The volume collects the essays presented at the 13th Workshop on Public Finance organised by Banca d'Italia in Perugia on 31 March-2 April 2011. The workshop concentrated on the measures aimed at guaranteeing sustainable budget policies in the aftermath of the global crisis started in 2008,...

This paper investigates the relationship between fiscal contractions, permanent improvements in public finances and short-run economic performance. The empirical evidence gathered from the European experience over the last three decades shows clearly that the composition of fiscal adjustments...

The volume collects the essays presented at the 12th Workshop on Public Finance organised by Banca d'Italia in Perugia on 25-27 March 2010. The workshop focused on the implications for fiscal policy analysis of the 2008-09 recession, the most severe at global level since the Great Depression....