Summary of Assessing the Macroeconomic Impact of Structural Reforms: The Case of Italy

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Assessing the Macroeconomic Impact of Structural Reforms: The Case of Italy summary
Italy can halve its euro-zone competitive gap through reforms in product, labor and service markets.

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International Monetary Fund economists Lusine Lusinyan and Dirk Muir studied the impact of a wide range of economic reforms on Italy’s economy. Their report showcases simulations and reflects Muir’s work as an IMF researcher specializing in modeling. This combination of academic case studies and the IMF’s Global Integrated Monetary and Fiscal (GIMF) modeling predicts improvement in Italy’s economic growth rate given a comprehensive package of reforms. The caveat is that Italy must implement reforms quickly and effectively. All models have their limitations, and this one is no exception; important issues such as restrictive professional services, the dynamics of hiring and firing policies, and the reforms’ impact on energy prices, are “only approximate.” The report also doesn’t address the “unofficial,” underground Italian economy. getAbstract recommends this research to anyone who is doing business in Italy or who is curious about how a low-performing euro-zone nation really could turn things around.

In this summary, you will learn

  • What the strengths and weaknesses of the Italian economy are
  • How macroeconomic reforms can boost its growth and lead to significant improvement
  • Why it’s critical for these reforms to take place promptly
 

Summary

Economic Reforms
Italy’s growth is low compared to its peers among other nations. Even so, Italy’s economy has several strengths: Households make ends meet, private debt is low and private savings are high. Public debt appears alarmingly excessive, although the public sector’s “large assets...
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About the Authors

Lusine Lusinyan and Dirk Muir are economists and researchers with the International Monetary Fund.


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