High Public Debt: The Italian Experience
Italy presents an almost perfect case study of the effects of high public debt. Government indebtedness has reached almost 100% of GDP and stands to increase further still, even under the most optimistic assumptions. Debt has grown rapidly, yet Italy has apparently not experienced any of the adverse effects of public debt growth predicted by economic theory. Have the public and private sectors in Italy found ways to adapt successfully to the rapidly increasing levels of public debt? Or has this adaptation been achieved at the cost of introducing other distortions into the economy? What does the Italian experience suggest for other countries facing high public debt, such as Belgium, Ireland and Brazil?
This volume contains the papers and proceedings of a conference organized by the Italian Macroeconomic Policy Group in association with CEPR and held at Castelgandolfo in June 1987, the first in an annual series on issues of economic policy which are at the same time relevant for Italy and of more general interest. This conference focused not on the causes of the growth of public debt, but rather on the manner in which financial markets and the private sector in Italy have reacted to this debt explosion.
In his introductory chapter, Luigi Spaventa surveys recent developments in the Italian economy. This is followed by papers by leading Italian economists which analyse monetary and fiscal policy, the impact of public debt on Italian financial markets and on household portfolios, and the relationship between debt growth and capital controls. The extended comments of distinguished foreign economists, such as Rudiger Dornbusch, Stanley Fischer, John Flemming, Jeffrey Frankel and Patrick Minford help place the lessons of the Italian experience in an international context.
This volume will interest students of public finance and of financial markets and economic development, as well as those concerned with recent Italian experience.