This paper considers the behavior of the yield differential between government and nongovernment bonds in Italy between 1976 and 1988. It is shown that the trend increase of the differential observed in this period was significantly influenced by the deterioration of public finances, as...

This paper examines central bank independence with reference to the constraints on central bank credit to the government, focusing on how such credit should be regulated. It discusses why credit should be contsrained, and in which forms, and how to implement those constraints