According to the literature, the decline experienced by the Italian economy in the last two decades depends on a slowdown of its labor productivity, starting in the Nineties. The supply-side explanations of this slowdown are inconsistent with the major stylized facts. In this paper, we verify whether a better explanation is provided by the effect of a negative demand shock, through Italy\u2019s external constraints, in the framework of Kaldor-Dixon-Thirlwall cumulative growth model. To this end, we use a multi-country generalization of Thirlwall\u2019s balance-of-payments-constrained growth model, which allows us to investigate the contribution of Italy\u2019s main trade partners to Italy\u2019s long-run growth from 1970 to 2010. The trade partners are disaggregated into seven groups: Eurozone core, Eurozone periphery, United States, other European countries, OPEC countries, BRIC, and the rest of the world. The results show that Italy\u2019s long-run growth has been consistent with the Bop-constraint, that its decline can be explained by a progressive tightening of this constraint, that the sudden slowdown of labor productivity in the Nineties corresponds with a major shock on Italy\u2019s external constraint, and that the major contributions to this shock came, through different channels of transmission, from the core Eurozone countries and from OPEC countries.<\/p>\n","protected":false},"excerpt":{"rendered":"
According to the literature, the decline experienced by the Italian economy in the last two decades depends on a slowdown of its labor productivity, starting […]<\/p>\n","protected":false},"featured_media":8161,"template":"","tags":[],"topic":[],"publications_category":[14],"expert":[15],"class_list":["post-4035","publication","type-publication","status-publish","has-post-thumbnail","hentry","publications_category-working-papers","expert-alberto-bagnai"],"acf":[],"yoast_head":"\n