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Italy's economic and employment problems were to a large extent home made, whereas external economic and political pressures did facilitate internal revitalization. While export‐oriented industries in northern Italy had maintained international competitiveness, overall employment rates were very low, and inflation was very high until the early 1990s. Since the clientelistic Italian state was not able to put the brakes on the spiral of wage and price increases that were automatically linked to all sorts of public and welfare‐state expenditures, public‐sector deficits were rising inexorably. After the collapse of the old party system, however, the unions were able and willing to enter into a series of accords with successive reform governments that not only facilitated price stability through wage restraint but that also legitimated significant welfare cutbacks that contributed to budget consolidation. The impetus for reform was a serious political commitment to meet the stringent Maastricht criteria in order to ensure Italy's membership in the European Monetary Union.

This is the third of five country case studies on income inequality, and investigates the impact of financial liberalization and the rise of financial rents on income inequality in Turkey. The chapter has five sections: Introduction; Indicators of Income Distribution: The Evidence—a broad overview, and evidence on the patterns of income distribution in Turkey over the last three decades; Macroeconomic Adjustment under Financial Liberalization and the Rise of Financial Rents—a discussion of the evolution of functional categories of income that includes an account of the macroeconomic adjustment; The Rising Fiscal Gap and the Role of the State in Regulating the Distributional Structure—a detailed analysis of the rise in public sector deficits and the distributive consequences of the widening fiscal gap; and Concluding Comments and Overall Assessment. Sect. 3 looks at the inherent tensions caused by the macroeconomic disequilibria embodied in the process of integration with world markets under conditions of a poorly supervised banking system and underdeveloped and fragile domestic asset markets; here, it is found to be analytically convenient to decompose the path of Turkish liberalization after 1980 into two major subperiods partitioned by the strategic step of capital account deregulation—which took place in 1989 and was completed by the full integration of the domestic market into global financial markets. This section also studies the patterns of the wage cycle and productivity growth using quantitative filtering techniques, and reports on the disassociation of labour remunerations from the productivity gains in the real sphere of the economy.

This chapter examines the effects of the three types of constitutional or statutory clauses—fiscal decentralization, direct popular rights, and formal fiscal restraints—on public deficit and debt in the twenty-six Swiss cantons, and is organized as follows. Section 9.2 describes cantonal institutions (called “debt brakes”) aimed at preventing public debt from getting out of control. Section 9.3 presents an econometric model to allow a more systematic analysis of their effects. Section 9.4 discusses the empirical results. Section 9.5 considers the new debt brake that has been introduced at federal level. Section 9.6 discusses the problem of overindebtedness at lower governmental levels that might arise in any federal country. It is shown that with well-designed institutions, federal states might be able to follow a sustainable fiscal policy better than unitary states. Alongside fiscal restrictions, fiscal referenda are useful in achieving that.

This chapter examines the adjustment of public wage bills and public deficits over business and political cycles, and is organized as follows. Section 9.2 presents the relation between public deficits and public wage bills in Organization for Economic Cooperation and Development countries over the last fifteen years, while Section 9.3 describes fiscal drift and fiscal tightening episodes. Section 9.4 analyzes the relations between the occurrence of fiscal drift and fiscal tightening episodes and the economic cycles, the election years, the transparency of governments, the freedom of the press, the union coverage, the political regime, and the electoral rules. A commentary is also included at the end of the chapter.

The chapter presents a new framework for categorizing economic growth models and applies it to twenty-eight OECD countries from 1995 to 2016. The framework draws on three fundamental ways in which economies can benefit from additional demand: the private sector (households and companies) can spend more than its income, the public sector can spend more than its revenues, or the economy sells more abroad than it imports. The empirical section uses fuzzy-set ideal type analysis to identify the combinations in which advanced economies used these three ways of boosting demand in three subperiods between 1995 and 2016. The results show that most economies use at least one of the three sources of extra demand to tackle the era of low growth. At the same time, there are clear differences in growth models between groups of countries. These are in line with clusters that the literature commonly identifies due to their institutional similarities. The growth models in this chapter are therefore outcomes of differences in growth regimes.

This chapter provides a structural overview of the Italian financial system. It notes that the Italian system, like that of other industrialized nations, has experienced very profound changes motivated by factors external to the financial system, such as economic adjustment policies in response to the second oil crisis or the high public-sector deficit. The chapter adds that other changes, such as advancements in communications, information technology, and technological innovation, correspond to common developments in the worldwide financial system. It points out that the regulation of the Italian financial system rejected the possibility of universal banking and instead opted for specialization according to criteria based on credit and deposit-maturity terms. However, the chapter notes that in recent years there has been considerable deregulation, which, together with the consolidation of activities within individual banks, has led to an erosion of the differences between the various types of institutions.

This chapter examines more discreet policy areas that focus on wealth and its taxation. It notes that this is particularly pertinent given the discourse on responsibilities discussed by Ruth Lister and the current debate over who should shoulder the burden of reducing the public deficit following the financial crisis. It discusses how the debate on the issue of inheritance tax, and wealth taxes more widely, has changed in the aftermath of the financial crisis and the formation of the Coalition government. It notes the importance of considering wealth taxes within the context of the wider tax system and, despite their apparent unpopularity, argues that supporters of such taxes are in a position to shape, rather than simply follow, public opinion.

Greece was the first country to seek financial assistance from Europe and the International Monetary Fund (IMF) in 2010. For this reason, public opinion in Europe, and especially in Germany, for a long time saw the Eurozone crisis through the Greek prism. Indeed, Greece was the perfect culprit: after failing to join the euro during its launch in 1999 and having narrowly qualified in 2001, the country immediately began to exceed the budgetary deficit limits it had promised to stick to. It attempted to cover up the true state of its public finances, and was then forced to ask for help after being exposed. For Germany, the Greek crisis seemed to offer all the features of a classical tragedy whose script had been written 20 years ago. To stave of its nightmare scenario, Germany had during the Maastricht negotiations demanded guarantees and safeguards in the form of the no bail-out clause, the prohibition of monetary financing of public deficits, the obligation to avoid “excessive” public deficits, and monetary sanctions. None of this was sufficient to avert disaster – but blaming the Eurozone’s difficulties only on a failure to implement an otherwise adequate surveillance framework would, however, be wrong.

This chapter looks at the life of Franco Modigliani who was awarded the Nobel Prize in 1985. Born in Rome in 1918, he earned his academic degrees in 1944 from the University of Rome and from the New School for Social Research. He later became a professor of economics and finance at MIT, and later an institute professor, emeritus. He stayed in that position until 2003. His work involved the life-cycle hypothesis which shows how public deficits or debts have an effect on the well-being of future generations as they displace productive capital. He also pursued emerging issues of economic policy that stress on the international payments system. His books include National Incomes and International Trade and Planning Production, Inventories and Work Forces.

This chapter considers the quantity rather than quality of infrastructure to figure out how much is enough. An issue that matters to municipalities with limited tax bases and the federal government’s management of catastrophic weather events’ infrastructure damage. The author suggests that the deficit in our infrastructure repair bill can only be solved if we address the issue of where and how we should—and shouldn’t—live