Although austerity was particularly strong in the aftermath of the economic crisis of 2008 and its consequences in the euro area, Italian fiscal policies have been characterised by tough consolidation periods ever since the 1990s.

Beyond fleeting references, there is surprisingly little analysis about the interrelationship between fiscal policy and safe assets. This study analyses this interrelationship and argues that, at a certain point, more public debt will not “buy” more safety: countries face a kind of “safe...