WP 2017/02: Withdrawal of Italy from the Eurozone: Stochastic Simulations of a Structural Macroeconometric Model

Working Paper a/simmetrie: Withdrawal of Italy from the Eurozone
Brigitte Granville Christian A. Mongeau Ospina Alberto Bagnai 23 Aprile 2017

This paper assesses the impact on the Italian economy of withdrawal of Italy from the Eurozone, by means of the stochastic simulation of a macroeconometric model. The model considers the contractionary effects of devaluation, the evolution of sovereign debt spread and the development of bilateral economic relations between Italy and its major trade partners. The simulation results are consistent with the findings of recent applied research: the Italian economy would follow the V-shaped pattern observed in most currency crises. After an initial period of stress, it would recover and resume growth at a reasonable pace.

Autori
Brigitte Granville Centre for Globalization Research, Queen Mary University of London
Christian A. Mongeau Ospina
Alberto Bagnai Università Gabriele d’Annunzio
Keywords
European economic and monetary union, ECB, balance of payment crisis, Target2, Euro
JEL Codes
E11, E12, E42, E58, F32, F33, F34, F36, N24
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