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

0 Posted by - 23 aprile 2017 - Working Papers Print This Post

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.

Alberto Bagnai
Università Gabriele d’Annunzio, a/simmetrie

Brigitte Granville
Centre for Globalization Research , Queen Mary University of London

Christian A. Mongeau Ospina
Università Gabriele d’Annunzio, a/simmetrie

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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