31. Has the “External Constraint” Contributed to Italy’s Stagnation? A Critical Event Analysis
- Author:
- Lucio Baccaro and Massimo D'Antoni
- Publication Date:
- 07-2020
- Content Type:
- Working Paper
- Institution:
- Max Planck Institute for the Study of Societies
- Abstract:
- Has the strategy of the “external constraint” (voluntarily limiting the country’s policy-mak- ing discretion by tying it to the European mast) contributed to Italy’s stagnation over the past twenty-five years? The existing literature is divided on this question. The dominant in- terpretation is that Italy’s stagnation is due to insufficient liberalization, and that the exter- nal constraint has had no negative and even a positive influence. An alternative interpreta- tion emphasizes the demand compression and supply-side effects of the external constraint. Based on three case studies of public debt management, privatization, and labor market policy, this paper reconstructs the process by which the external constraint has affected out- comes. It argues that it has had a negative impact, but more as a necessary condition than as a sufficient one. In other words, it would probably have been possible to manage the exter- nal constraint differently to produce better outcomes, but without the external constraint, the stagnation would likely have been less deep.
- Topic:
- Political Economy, European Union, Economic Growth, and Liberalism
- Political Geography:
- Europe, Italy, and Southern Europe