This paper analyzes the sustainability of Italy’s current accounts from 1861 to 2000. Whether or not we find empirical support to sustainability depends on the statistical condition of stationarity of the current account series. Non stationarity of the current accounts implies the economy has violated its intertemporal budget constraint. Unit root tests to study the stationarity of Italy’s current accounts suggest that in the long run (1861 to 2000) Italy’s external position was sustainable: the Italian economy seems to have used the external deficits (surpluses) to smooth its aggregate consumption. The persistent current account deficits in the shorter 1861-1913 period were generated by foreign capital inflows that allowed investment to rise and, in turn, to prompt the nation’s productivity and economic efficiency. Therefore, they do not seem to have curbed economic growth.

Pistoresi, Barbara e Alberto, Rinaldi. "Italy's current account sustainability: a long run perspective, 1861-2000" Working paper, RECent (Center for Economic Research) - Dipartimento di Economia Marco Biagi - Università di Modena e Reggio Emilia, 2013. https://doi.org/10.25431/11380_991307

Italy's current account sustainability: a long run perspective, 1861-2000

PISTORESI, Barbara;RINALDI, Alberto
2013

Abstract

This paper analyzes the sustainability of Italy’s current accounts from 1861 to 2000. Whether or not we find empirical support to sustainability depends on the statistical condition of stationarity of the current account series. Non stationarity of the current accounts implies the economy has violated its intertemporal budget constraint. Unit root tests to study the stationarity of Italy’s current accounts suggest that in the long run (1861 to 2000) Italy’s external position was sustainable: the Italian economy seems to have used the external deficits (surpluses) to smooth its aggregate consumption. The persistent current account deficits in the shorter 1861-1913 period were generated by foreign capital inflows that allowed investment to rise and, in turn, to prompt the nation’s productivity and economic efficiency. Therefore, they do not seem to have curbed economic growth.
Settembre
RECent Working Paper Series
Pistoresi, Barbara; Rinaldi, Alberto
Pistoresi, Barbara e Alberto, Rinaldi. "Italy's current account sustainability: a long run perspective, 1861-2000" Working paper, RECent (Center for Economic Research) - Dipartimento di Economia Marco Biagi - Università di Modena e Reggio Emilia, 2013. https://doi.org/10.25431/11380_991307
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11380/991307
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