Is the Italian Public Debt Really Unsustainable? An Historical Comparison (1861-2010)

50 Pages Posted: 16 Apr 2013

See all articles by Silvana Bartoletto

Silvana Bartoletto

University of Naples Parthenope - Department of Economic Studies (DES)

Bruno Chiarini

University of Naples, Parthenope

Elisabetta Marzano

University of Naples Parthenope - Department of Economic Studies (DES)

Date Written: April 16, 2013

Abstract

The aim of this paper is to analyze the sustainability of public debt in Italy during the last 150 years (1861-2010) by employing a database containing several statistical novelties: new time series estimates of public debt and GDP (respectively Bank of Italy and Baffigi, 2011) and an original reconstruction of the revenues of the State. The key economic indicators analyzed include public debt, primary and total deficits, nominal and real GDP rates of growth. Long-term analysis of new homogeneous statistical series has led to a different perspective, in particular when compared with the existing Italian literature on the debt-to-GDP ratio. Two main issues are addressed. First, we examine the size and dynamics of public finance aggregates in a long-term perspective. In particular, we carry out a detailed historical analysis, aiming to identify the determinants of public debt and its ratio to GDP. Second, following the approach proposed both by Bohn (1998, 2005) and Doi et al. (2011), we test for the sustainability of public debt in Italy, comparing four different historical periods.

Keywords: public debt sustainability, Italian debt history, intertemporal budget constraint, fiscal rule

JEL Classification: C220, E620, H600, N130, N140, N230, N240

Suggested Citation

Bartoletto, Silvana and Chiarini, Bruno and Marzano, Elisabetta, Is the Italian Public Debt Really Unsustainable? An Historical Comparison (1861-2010) (April 16, 2013). CESifo Working Paper Series No. 4185. Available at SSRN: https://ssrn.com/abstract=2251792

Silvana Bartoletto (Contact Author)

University of Naples Parthenope - Department of Economic Studies (DES) ( email )

via Medina 40
Naples, 80133
Italy

Bruno Chiarini

University of Naples, Parthenope ( email )

Via Generale Parisi 13
Napoli, 80133
Italy

Elisabetta Marzano

University of Naples Parthenope - Department of Economic Studies (DES) ( email )

via Medina 40
Naples, 80133
Italy

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