UK's NIESR Simulates Italy Near-term Macroeconomic Conditions

.@marta_lopresto & @amit_kara use the @NIESRorg #NiGEM #Macroeconomic model to simulate the macroeconomic effect on #Italy – both 4m the current political uncertainty, & the case where 5Star-Lega form a government that enacts #FiscalStimulus, latter w the following assumptions: pic.twitter.com/52ZvqTIJ8k

— Satyen Baindur (@Satyen_Baindur) June 2, 2018

Results: Year 1 - slight GDP expansion (from baseline of ~1.4%), but larger contractions (also from baseline) over the next 2 years with no real change in GDP growth rate; unemployment declines marginally Year1, but goes back up next 2 years; however #FiscalDeficit increases ~5%. pic.twitter.com/zNXIeaMNbL

— Satyen Baindur (@Satyen_Baindur) June 2, 2018

The upside risk to this scenario, which the authors think unlikely, is from the coalition negotiating more fiscal space with the #EuropeanCommission (which might condition that on #StructuralReforms that boost productivity…) which might lower the investment premium etc...

— Satyen Baindur (@Satyen_Baindur) June 2, 2018

Could Italy Exit the Eurozone, or even the European Union?

.@piie In tightly argued piece reversing a previous position - that #ItalExit 4m #EMU & even 4m #EU could conceivably come 2 pass, @ojblanchard1, @jzettelmeyer & @smerler finally conclude that saner minds in the Italian Senate @SenatoStampa or a Presidential veto might prevent it pic.twitter.com/uY1xjLSB57

— Satyen Baindur (@Satyen_Baindur) May 25, 2018

The situation is rich, one might add, w ironies - although 'veto' itself is a Latin word, and the concept originated in ancient Rome as the 'intercessio' meant to empower tribunes on behalf of Plebeians against Patricians - modern Italy actually has only a weak Presidential veto

— Satyen Baindur (@Satyen_Baindur) May 25, 2018

...which can be overridden by a simple majority in Parliament. In discussing how the @ecb's #QuantitativeEasing may not apply to Italian bonds after a downgrade, one might note also that the current @ecb President is a former @bancaditalia Governor (& continuing as Emeritus...)

— Satyen Baindur (@Satyen_Baindur) May 25, 2018

How Europe too could be a Superpower, like China and the US!

.@GuntramWolff argues that the #EU will need a three-pronged long-term strategy: to improve its own #Investment climate; to enhance its own #Security capacity; and to strengthen further its #Innovation, especially in the digital domain. https://t.co/SmXMMOqK52

— Satyen Baindur (@Satyen_Baindur) May 13, 2018