Italy in the Eurozone

Item Type Monograph (Working Paper)
Abstract Using a DSGE model with nominal wage rigidity, we investigate two scenarios for the Italian economy. The first considers sustained policy commitment to reform. The results indicate the possibility of `growing out of bad initial conditions', if fiscal consolidation is combined with a program for bank recovery and for competitiveness and growth. The second scenario involves a strong asymmetric recession. It is likely to be very severe under the restrictions of the currency union. A benign exit from the Eurozone with stable investor expectations could substantially dampen the short-run impact. Stabilization is achieved by monetary expansion, combined with exchange rate depreciation. However, investor panic may lead to escalation. Capital market reactions would offset the benefits of monetary autonomy and much delay the recovery.
Authors Keuschnigg, Christian; Kogler, Michael; Kirschner, Linda & Winterberg, Hannah
Language English
Subjects economics
HSG Classification contribution to scientific community
HSG Profile Area SEPS - Quantitative Economic Methods
Date July 2020
Depositing User Dr. Mirela Keuschnigg
Date Deposited 04 Jul 2019 14:26
Last Modified 20 Jul 2022 17:38


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Keuschnigg, Christian; Kogler, Michael; Kirschner, Linda & Winterberg, Hannah: Italy in the Eurozone. , 2020,

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