Template-Type: ReDIF-Article 1.0
Author-Name: Sandro Momigliano
Author-Email: 
Author-Workplace-Name: Bank of Italy, Structural Economic Analysis Department, Public Finance Division.
Author-Name: Pietro Rizza
Author-Email: 
Author-Workplace-Name: Bank of Italy, Structural Economic Analysis Department, Public Finance Division.
Title: Temporary measures in Italy: buying or losing time?
Abstract: In this paper we examine the effects of temporary measures on the Italian budget in the period 1997-2006 and assess their appropriateness. We also analyse the role of extraordinary operations which reduced the level of public debt in the same time frame while leaving the net worth of the public sector broadly unchanged. Our analysis suggests that temporary measures and extraordinary operations were used mainly to comply formally with EU fiscal rules without incurring the economic and political costs of more structural adjustment. Policy-makers bought time in a worsening cyclical context, expecting the recovery to be imminent. Ex post information reveals that the timing of this strategy was wrong. In a broader temporal perspective, the use of extraordinary operations has made it possible to postpone more permanent actions which would have improved the sustainability of Italian public finances. It is difficult not to conclude that precious time has been lost designing an equitable distribution across generations of the expected costs of the upcoming demographic transition.
Classification-JEL: H62, H20, H50, E69.
Keywords: temporary measures, economic cycle, budgetary policies.
Journal: MNB Conference Volume
Pages: 61-71
Volume: 1
Issue: 1
Year: 2007
Month: December
File-URL: http://www.mnb.hu/letoltes/sandro-momigliano-pietro-rizza.pdf
File-Format: Application/pdf

Handle: RePEc:mnb:confer:v:1:y:2007:i:1:p:61-71