The Phillips Curve and the Italian Lira, 1861-1998

We examine Italian inflation rates and the Phillips curve with a very long-run perspective, one that covers the entire existence of the Italian lira from political unification (1861) to the entry of Italy in the European Monetary Union (end of 1998). We first study the volatility, persistence and stationarity of the Italian inflation rate over the long run and across various exchange-rate regimes that have shaped Italian monetary history. Next, we estimate alternative Phillips equations and investigate the extent to which nonlinearities, asymmetries and structural changes characterize the inflation-output trade-off in the long run. We capture the effects of structural changes and asymmetries on the estimated parameters of the inflation-output trade-off relying partly on sub-sample estimates and partly on time-varying parameters estimated with the Kalman filter. Finally, we investigate causal relationships between inflation rates and output and extend the analysis to include the US and the UK for comparison purposes. The inference is that Italy has experienced a conventional inflation-output trade-off only during times of low inflation and stable aggregate supply.inflation, Phillips curve, Italian lira

Macroeconomic instability and the phillips curve in Italy

The theme of this paper is whether there was a textbook-like inflation-output tradeoff in post-WWII Italy. We estimate both standard and time-varying parameter models of the relationship between inflation and the level of real economic activity over the 1949 to 2010 period and find no evidence of a stable, significant and positive association between output and prices. We attribute this evidence primarily to a fiscally dominated monetary policy and a rigid indexation mechanism aimed at protecting wages from inflation. These two institutions contributed to the persistent inflation bias and macroeconomic instability that lasted almost until the entry of the country in the European Monetary Union

La historiografía sobre el desarrollo económico italiano en los últimos treinta años

Editada en la Universidad Carlos IIIEste ensayo analiza la historiografía del crecimiento económico italiano moderno, distinguiendo entre los enfoques que consideran a Italia como un caso más en el proceso general de industrialización europea y aquellos que identifican unas características específicas y únicas del caso italiano. Se pasa revista también en este trabajo a los intentos de hallar una cronología del desarrollo en Italia y de establecer sus causas y condiciones.This essays analyzes the historiography of Italy's modern economic growth. A distinction is made between those interpretations that emphasize the uniqueness of the Italian experience and those that include Italy in the general process that started in Britain and spread to the rest of Europe through the nineteenth and twentieth centuries. In addition, the article surveys the most recent attempts to establish the timing, the causes, and the obstacles to Italy's economic growth during the last century.Publicad

Did Adhering to the Gold Standard Reduce the Cost of Capital?

A commonly cited benefit of the pre-World War One gold standard is that it reduced the cost of international borrowing by signaling a country's commitment to financial probity. Using a newly constructed data set that consists of more than 55,000 monthly sovereign bond returns, we test if gold-standard adherence was negatively correlated with the cost of capital. Conditional on UK risk factors, we find no evidence that the bonds issued by countries off gold earned systematically higher excess returns than the bonds issued by countries on gold. Our results are robust to allowing betas to differ across bonds issued by countries off-and on-gold; to including proxies that capture the effect of fiscal, monetary, and trade shocks on the commitment to gold; and to controlling for the effect of membership in the British Empire

Italian city-states and financial evolution

The term financial revolution has been abused in the literature. Revolution connotes a sharp and unique break from the past that should stand up to careful historical scrutiny, but in fact it does not. Evolution describes financial history better than revolutions. We compare the classic ‘financial revolutions’ with the financial innovations of Genoa, Venice and Florence in the Quattrocento and Cinquecento and the upshot is that these Italian city-states – the two maritime cities more than Florence – had developed many of the features that were to be found later on in the Netherlands, England and the United States. The importance of the early financial innovators has been eclipsed by the fact that these city-states did not survive politically. Instead, the innovations were absorbed in the long chain of financial evolution and, in the process, lost the identity of their creators