Fiscal devaluation scenarios: A quantitative assessment for the Italian economy

Annicchiarico BarbaraDi Dio FabioFelici Francesco
CEIS Research Paper
We study the potential impact of fiscal devaluation policies on the Italian economy using IGEM, a dynamic general equilibrium model for the Italian economy developed at the Department of Treasury of the Italian Ministry of the Economy and Finance. The simulations show that fiscal devaluation policies are likely to produce short-run slight improvements on the external position of the economy, while the output gains seem to persist in the long run. Non-negligible distributional effects across households are also observed, since taxation on consumption tends to be regressive.
Number: 311
Keywords: Fiscal Devaluation, DGE, Structural Reforms, Italy
JEL codes: E10, C50, E60
Volume: 12
Issue: 04
Date: Wednesday, April 9, 2014
Revision Date: Wednesday, September 24, 2014