Escaping the high-debt and low-growth trap

A policy paper published by OFCE Science Po investigates the causes of Italy’s main economic plights and discuss some policy recommendations for a revival of growth

To reignite growth and solve its public debt problem Italy needs more Europe not less Europe. This is the conclusion of a policy brief published by OFCE Science Po and authored by Cèline Antonin, Mattia Guerini, Mauro Napoletano and Francesco Vona.

The policy brief, which acknowlegdes the GROWINPRO project, investigates the causes of Italy’s two main economic plights, discuss how they are intimately related, and highlights some policy recommendations for a revival of growth in Italy.

Most policies reigniting Italy’s growth, the paper concludes, require the active participation and cooperation of the European Union to be effective. The introduction of a golden rule of fiscal policy, for instance, needs re-discussing the entire framework of fiscal rules in the EU.

The EU could also be helpful in mobilizing additional funds for Italy, via a common investment plan for the area. Third, even industrial policies nurturing learning and firm capabilities seem unfeasible without the explicit cooperation of European authorities in light of the existing norms constraining support to national firms.

In conclusion, the authors argue, Italy cannot solve its economic problems without the help of Europe, but solving these problems requires an active role of Italy, which is a founding country of the union, in a process of overall reform of European policies.

Click here to download the Policy Brief