Stikkordarkiv: Italia

Daniel Gros – Kan Italia overleve stormen?

Akkurat nå er eurokrisen litt i limbo. En endelig løsning på ordlyden og ratifiseringen av en finanspolitisk avtale for EU-26 (alle minus UK) kommer ikke før mars.

EU forsøker å pumpe opp krigskisten til IMF, og det vil ta tid. I tillegg har ikke rentene beveget seg stort i det siste. Det kan kjapt endre seg, men inntil videre – limbo.

Her er Daniel Gros:

But the process of reducing wage costs must now start to convince financial markets that Italy will be able to grow again on the back of growing exports, as it did in the 1990s.
Provided the real sector of the economy can be shielded from the worst effects of the financial storm the country should have enough time for the real adjustment to bear its first fruits.

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Hvorfor ikke italienske kutt vil fungere.

Her er paradokset: På den ene siden må det politiske og økonomiske Italia få orden på statsfinansene slik at gjeldsbyrden blir overlevbar. Dette involverer massive restruktureringer som til syvende og sist skal berolige markedet.

På den andre siden annonserte EU idag at de forventer 0,5% vekst neste år og 0,7% vekst i 2013 for Italia. Det er nærmest stillestående. Ytterligere kutt i de offentlige budsjettene vil nærmest kvele den lille veksten som finnes og det private er akkurat nå båreliggende.
Tyler Cowen forklarer mer:

Tyler Cowen: "Italian Fiscal Austerity Won't Work": Not now, at least.  You don’t have to buy into the more extreme forms of Keynesian economics.  In the short run, what the country needs is more revenue, relative to expenditure.  If you cut the government expenditures, in the short run revenues go down, including tax revenues.  Maybe you substitute in some private sector outputs for public sector outputs and furthermore maybe those private sector outputs bring higher utility to the citizenry.  But they don’t bring higher revenue, not in the short run.

The financial crisis, now exacerbated by a revenue shortage, destroys the economy before the potential gains from the expenditure-switching have a chance to kick in.  Furthermore, if the broader economy is dysfunctional, the gains from expenditure-switching to the private sector may not show up even in the medium run.  Growth-enhancing reforms can take many years to pay off, as we see from the histories of New Zealand, Chile, or the ex-communist countries.  Yet even the Italian two-year note shows default risk, yielding twice as much or more as the American 30-year bond.

That said, more government spending probably won’t work either, unless you think that spending is extremely effective in targeting unemployed resources, which in Italy I believe it is not.  Neither contractionary nor expansionary fiscal policy will succeed.

The only answer, if that is the right word, is a central bank.  Right now central banks need to be doing everything they can to avoid a second Great Depression.  I talk to many smart people, and I am continually surprised how many of them do not realize the urgency of the current situation.

By the way, some of the worst features of the Italian economy — paying people to do nothing, or to do the wrong thing — can in the abstract be described as “automatic stabilizers.”  Automatic stabilizers play an important and largely positive role in macroeconomic response, but if not designed properly they too can bring or hasten downfall.  The automatic stabilizers in Italy have thwarted productive incentives and thus lowered the growth rate.  And furthermore, dismantling some of those automatic stabilizers eventually needs to be done, but in the short run again could hurt revenue.  When a country uses automatic stabilizers for growth-damaging ends, it paints itself into an especially difficult corner.  How to move forward?

The economic policies of the Nordic countries look better all the time, and actually you can add the United States to that list, believe it or not.

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Hva var det McCain sa: – Fundamentals are strong? Italia-utgave.

I dag var Daniel Gros gjest hos Bloomberg Radio. Grunnen til det er at han har skrevet en av de mest makrobaserte artiklene om Italia. Gros går tilbake til 2000, og forsøker å forklare hva som skjedde når Italia begynte å stagnere.

Her er ‘the fundamentals’:

What is holding Italy back? | vox – Research-based policy analysis and commentary from leading economists: «Italy’s economy has clearly underperformed since it entered the euro – both relative to its peers and relative to the previous decade. Italy’s growth rate averaged just over 1% during the boom years preceding the crisis. During the crisis, its GDP plunged 5%; instead of rebounding, its economy is now growing at only about 1%.
At this rate, Italy’s public debt, at 120% of GDP, becomes an existential threat to the entire Eurozone (Eichengreen 2011).
Understanding and curing Italy’s growth problems is thus vital for the survival of the euro.

It’s complicated

My central point is that understanding Italy’s deteriorating growth performance requires going beyond the well-known weaknesses that have held back Italy for ages. The fact that Italy has always been an economic policy disaster area does nothing to help us understand why its growth slowed around 1999/2000. We need to find things that changed around that time. This is not easy.
The three most important measurable growth factors actually improved in both absolute and relative terms:

  • Investment in physical and human capital; the former is high and the latter is improving rapidly.
  • Structural indicators in terms of product and labour market regulation (all improving absolutely and relative to Germany according to OECD indicators).
  • Investment in R&D (improving).

The only factors that have deteriorated absolutely and relative to the core of the Eurozone are indicators of governance – such as corruption and rule of law.
Reversing this political decline will take years of a national commitment – of which there is little sign yet.

It’s not a lack of capital

The relative underperformance of Italy cannot be due to a shortage of either physical or human capital.
Over the last decade, Italy has invested close to 20% of its GDP in most years, a higher percentage than Germany (and the same is the case for investment in plant and equipment, see Figure 1). But despite this effort, GDP is now barely higher than ten years ago.

This implies that the efficiency of this investment has been abysmal. Between 1999 and 2009 the economy-wide (net) capital stock of Italy increased by 19%; but real GDP increased only by 5%. By contrast, Germany’s capital stock increased by less (about 13%), but its GDP increased by much more (almost 9%). More investment is thus unlikely to provide a solution to the growth problem.»

Jeg skulle gjerne postet hele artikkelen her, men da ville ikke grafene og tabellene kommet med. Så les hele her, og husk at det er underliggende problemer som driver hele denne mørke spiralen i obligasjonsmarkedet.

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Litt Irland i Italia

Vi går tilbake til oktober 2010. Irsk 10-års gjeld lå på 6,6% og krøp oppover. I slutten av november var renten på grønn gjeld på 9% og akutt hjelp var…vel, akutt. I dag endte italiensk 10-års gjeld på 6,656% og det er en sterk følelse av dejavu.

Husk dette: budsjettunderskuddet ligger på rundt 4% av BNP i Italia, mens underskuddet er 118% av BNP. Rent økonomisk har ikke Italia endret seg dramatisk, men det er tiden vi lever i som har forandret seg.

Vi får hente spillteori-eksen fra loftet, igjen.

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Quiz: Hvor høy rente må Italia betale for å låne i 10 år?

Ehem. Kremt. Kremt:
Screen shot 2011 10 31 at 20 23 24
Selv om Oljefondet har investert som en pensjonist i det siste, redusert obligasjons-referanseproteføljen, solgt seg ut av usikker gjeld, og prioritert annen gjeld, så har vi en del kroner i Italia.

Dette ser ut som en jobb for Super-Mario. Bare han som har størst fluesmekker.

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