Exploring Italy's Growth Challenge: A Model-Based Exercise

Directorate General Economic and Financial Affairs (DG ECFIN), European Commission Discussion Paper No. 41

52 Pages Posted: 26 Jun 2019

See all articles by István P. Székely

István P. Székely

European Commission, DGECFIN; Corvinus University of Budapest

Date Written: December 1, 2016

Abstract

Since the mid-1990s, Italy’s economic growth faltered, primarily due to sluggish productivity growth. This article investigates the root causes of the slow growth. Firstly, it benchmarks Italy over time vis-à-vis euro area and OECD countries in the area of human capital, product market regulation, taxation structure and innovation. The analysis shows that Italy's gaps in these areas have grown over the last 15 years and are particularly large for human capital. Secondly, it uses a set of stylized simulations in QUEST R&D model of the European Commission to assess the potential impact of a package of growth-enhancing reforms in these areas. The simulations show that structural reforms could boost productivity and GDP growth significantly. Important reforms are ongoing. Given the very nature and the size of the gaps, it is important that the reform momentum is maintained.

Keywords: FP, productivity, Italy, structural reforms, product market competition, human capital

JEL Classification: E17, E60, O11, O41, O47

Suggested Citation

Szekely, Istvan P., Exploring Italy's Growth Challenge: A Model-Based Exercise (December 1, 2016). Directorate General Economic and Financial Affairs (DG ECFIN), European Commission Discussion Paper No. 41. Available at SSRN: https://ssrn.com/abstract=3407394 or http://dx.doi.org/10.2139/ssrn.3407394

Istvan P. Szekely (Contact Author)

European Commission, DGECFIN ( email )

CHAR 15/216
Brussels, Bruxelles B-1040
Belgium
+3222958674 (Phone)

Corvinus University of Budapest ( email )

Budapest
Hungary

HOME PAGE: http://www.uni-corvinus.hu/index.php?id=22061

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
5
Abstract Views
109
PlumX Metrics