Growth and Cycles of the Italian Economy Since 1861: The New Evidence (original) (raw)

Abstract

Based on a newly-available large set of historical national accounts, the paper revisits the main features of economic growth and cycles in Italy for the post-Unification period 1861-2011. Alongside the structural changes in growth dynamics, the main sources of output and productivity growth are identified. As regards the analysis of the underlying cyclical component, a business cycle chronology is first established and then both the specific patterns of individual cycles and the co-movements of output with key macroeconomic variables are investigated. In the 150 years since its political Unification, Italy's economic growth was mainly propelled by consumption and investments, whereas on the supply side the industry and services sectors were by far the main contributors, also because of the positive effect of labour reallocation to nonfarm activities. Over the same period, Italy experienced approximately 20 business cycles of varying duration and amplitude. Output fluctuations were dominated by the short-term variability of agricultural production before World War II and by fluctua-Earlier drafts of this paper were presented at the study day in honour of Guido M. Rey "L'economia italiana: modelli, misurazione e nodi strutturali" (Università degli Studi Roma Tre, 5 March 2010) and the conference "Sviluppo economico e benessere" (Università Politecnica delle Marche, Ancona, 5 and 6 November 2010). We are grateful to all the participants for their useful comments. We also thank Alberto Baffigi for his precious help with the historical sources used, and Claire Giordano and Francesco Zollino for sharing their data with us upon request. Last, but not least, we thank two anonymous reviewers for their thorough review and highly valuable comments and suggestions, which significantly contributed to improving the quality of the paper. The usual caveats apply.

Loading...

Loading Preview

Sorry, preview is currently unavailable. You can download the paper by clicking the button above.

References (66)

  1. 1861 1901 p 1941 1981 1862 1902 1942 P 1982 1863 1903 1943 1983 T 1864 T 1904 1944 1984 1865 P 1905 t 1945 T 1985 1866 1906 1946 1986 1867 T 1907 1947 P 1987 1868 1908 p 1948 1988 1869 1909 1949 1989 P 1870 P 1910 t 1950 1990 1871 1911 1951 1991 1872 1912 1952 t 1992 1873 T 1913 P 1953 p 1993 T 1874 P 1914 1954 T 1994 1875 1915 T 1955 p 1995 p 1876 1916 1956 1996 1877 T 1917 P 1957 1997 1878 p 1918 1958 t 1998 1879 t 1919 1959 1999 t 1880 1920 1960 2000 1881 P 1921 T 1961 2001 P 1882 1922 1962 2002 1883 1923 1963 P 2003 1884 T 1924 1964 2004 1885 1925 P 1965 T 2005 T 1886 1926 1966 2006 1887 P 1927 T 1967 2007 P 1888 1928 1968 2008 1889 T 1929 P 1969 2009 T 1890 1930 1970 P 2010 1891 1931 T 1971 2011 1892 1932 p 1972 T 1893 1933 1973 1894 1934 t 1974 P 1895 p 1935 p 1975 T 1896 1936 t 1976 p 1897 t 1937 1977 1898 1938 1978 t 1899 1939 1979 1900 1940 1980 P References Ancona A, Bonato L (1996) Ciclo economico e stabilizzazione. La storia recente in un confronto inter- nazionale. Riv Pol Econ 86:3-35
  2. Andrews DWK (1993) Tests for parameter instability and structural change with unknown change point. Econometrica 61:821-856
  3. Andrews DWK, Ploberger W (1994) Optimal tests when a nuisance parameter is present only under the alternative. Econometrica 62:1383-1414
  4. Ardeni PG, Gallegati Mauro (1991) Long-term trends and cycles in the Italian economy (1861-1988). Giorn Econ Ann Econ 50:193-235
  5. Ardeni PG, Gallegati Mauro (1994a) Cicli di crescita nello sviluppo: 1861-1990. In: Ciocca P (ed) Il progresso economico dell'Italia. Permanenze, discontinuità, limiti, Il Mulino, Bologna, pp 109-135
  6. Ardeni PG, Gallegati Mauro (1994b) Crescita e fluttuazioni nell'economia italiana (1861-1913). Una rein- terpretazione. Polit Econ 10:119-153
  7. Artis MJ, Marcellino M, Proietti T (2004) Dating the Euro area business cycle. In: Reichlin L (ed) The Euro area business cycle: stylized facts and measurement issues. Centre for Economic Policy Research (CEPR), London, pp 7-33
  8. Baffigi A (2013) National Accounts, 1861-2011. In: Toniolo G (ed) The Oxford handbook of the Italian economy since Unification. Oxford University Press, New York, pp 157-186
  9. Baffigi A (2014) Il PIL per la storia d'Italia. Istruzioni per l'uso, Marsilio Editori, Venice Baffigi A, Bontempi ME, Golinelli R (2013) Potential output, output gap, and inflation in Italy in the long term (1861-2010): an econometric analysis. Economic History Working Papers (Quaderni di Storia Economica) 29, Bank of Italy, Rome
  10. Bai J, Perron P (1998) Estimating and testing linear models with multiple structural changes. Econometrica 66:47-78
  11. Bai J, Perron P (2003) Computation and analysis of multiple structural change models. J Appl Econ 18:1-22
  12. Battilani P, Felice E, Zamagni V (2012) Il valore aggiunto dei servizi a prezzi correnti (1861-1951), Mimeo 35 "Each cycle, each period of prosperity and depression, has its special features which are not present in any, or not in many, others. In a sense, each cycle is an historical individual: each is embedded in a social-economic structure of its own" (Haberler 1958, p. 275).
  13. Baumol WJ (1967) Macroeconomics of unbalanced growth: the anatomy of urban crisis. Am Econ Rev 57:415-426
  14. Baumol WJ, Blackman SAB, Wolff EN (1985) Unbalanced growth revisited: asymptotic stagnancy and new evidence. Am Econ Rev 75:806-817
  15. Bergman M, Bordo MD, Jonung L (1998) Historical evidence on business cycles: the international expe- rience. In: Fuhrer JC, Schuh S (eds) Beyond shocks: what causes business cycles?. Federal Reserve Bank of Boston, Boston, pp 65-118
  16. Broadberry SN (2005) Appendix 9.1. Italian GDP during World War I. In: Broadberry SN, Harrison M (eds) The economics of World War I. Cambridge University Press, New York, pp 305-309
  17. Broadberry SN, Giordano C, Zollino F (2011), A sectoral analysis of Italy's development, 1861-2011. Economic History Working Papers (Quaderni di Storia Economica) 20, Bank of Italy, Rome
  18. Bry G, Boschan C (1971) Cyclical analysis of time series: selected procedures and computer programs. National Bureau of Economic Research (NBER), New York
  19. Burns AF, Mitchell WC (1946) Measuring business cycles. National Bureau of Economic Research (NBER), New York Chiarini B (1994) Trends, effetti permanenti e componenti non stazionarie: uno studio disaggregato del prodotto e dell'occupazione italiana. Riv Pol Econ 84:39-80
  20. Checchi D, Rampa G, Rampa L (1997) Fluttuazioni cicliche di medio termine nell'economia italiana del dopoguerra. In: Banca d'Italia (ed) Ricerche quantitative per la politica economica, 1995. Centro stampa della Banca d'Italia, Roma, pp 989-1055
  21. Ciccarelli C, Fenoaltea S (2007) Business fluctuations in Italy, 1861-1913: the new evidence. Explor Econ Hist 44:432-451
  22. Ciocca P (ed) (1994) Il progresso economico dell'Italia. Permanenze, discontinuità, limiti, Il Mulino, Bologna
  23. Ciocca P (2007) Ricchi per sempre? Una storia economica d'Italia (1796-2005). Bollati Boringhieri, Torino
  24. Ciocca P, Toniolo G (eds) (1976) L'economia italiana nel periodo fascista. Il Mulino, Bologna Clementi F, Gallegati Marco, Gallegati Mauro (2012) Crescita e fluttuazioni economiche: un'analisi di lungo periodo dell'Italia postunitaria, 1861-2009. In: Canullo G, Pettenati P (eds) Sviluppo economico e benessere. Saggi in ricordo di Giorgio Fuà. Edizioni scientifiche italiane, Napoli, pp 187-223
  25. de Avillez R (2012) Sectoral contributions to labour productivity growth in Canada: does the choice of decomposition formula matter? Int Product Monit 24:97-117
  26. De Bonis R, Farabullini F, Rocchelli M, Salvio A (2012) A quantitative look at the Italian banking system: evidence from a new dataset since 1861. Economic History Working Papers (Quaderni di Storia Economica) 26, Bank of Italy, Rome
  27. Delli Gatti D, Gallegati Marco, Gallegati Mauro (2003) Sulla natura e le cause delle fluttuazioni cicliche in Italia (1861-2000). In: Ciocca P, Toniolo G (eds) Storia economica d'Italia. 3. Industrie, mercati, istituzioni. 1. Le strutture dell'economia, Laterza, Roma-Bari, pp 535-578
  28. Delli Gatti D, Gallegati Marco, Gallegati Mauro (2005) On the nature and causes of business fluctuations in Italy, 1861-2000. Explor Econ Hist 42:81-100
  29. Denison EF (1962) The sources of economic growth in the united states and the alternative before US. Supplementary Paper No. 13, Committee for Economic Development, New York Di Guilmi C, Gaffeo E, Gallegati Mauro (2004) Empirical results on the size distribution of business cycle phases. Phys A Stat Theor Phys 333:325-334
  30. Dumagan JC (2013) A generalized exactly additive decomposition of aggregate labour productivity growth. Rev Income Wealth 59:157-168
  31. Ercolani P (1978) Documentazione statistica di base. In: Fuà G (ed) Lo sviluppo economico in Italia. Storia dell'Economia Italiana negli ultimi cento anni. Volume III-Studi di settore e documentazione di base, 3rd edn. Franco Angeli, Milano, pp 388-472
  32. Federico G (ed) (1994) The economic development of Italy since 1870. Edward Elgar, Aldershot Federico G (2003) Le nuove stime della produzione agricola italiana, 1860-1910: primi risultati e impli- cazioni. Riv Stor Econ 19:359-381
  33. Felice E, Carreras A (2012) When did modernization begin? Italy's industrial growth reconsidered in light of new value-added series, 1911-1951. Explor Econ Hist 49:443-460
  34. Fenoaltea S (2005a) La crescita economica dell'Italia postunitaria: le nuove serie storiche. Riv Stor Econ 21:91-121
  35. Fenoaltea S (2005b) The growth of the Italian economy, 1861-1913: preliminary second-generation esti- mates. Eur Rev Econ Hist 9:273-312
  36. Fenoaltea S (2006) L'economia italiana dall'Unità alla Grande Guerra. Laterza, Roma-Bari Fiorito R, Kollintzas T (1994) Stylized facts of business cycles in the G7 from a real business cycles perspective. Eur Econ Rev 38:235-269
  37. Fuà G (ed) (1969) Lo sviluppo economico in Italia. Storia dell'Economia Italiana negli ultimi cento anni. Studi di settore e documentazione di base, vol III, 1st edn. Franco Angeli, Milano
  38. Fuà G (ed) (1978) Lo sviluppo economico in Italia. Storia dell'economia italiana negli ultimi cento anni. Volume III -Studi di e documentazione di base, 3rd edn. Franco Angeli, Milan
  39. Fuà G (ed) (1981) Lo sviluppo economico in Italia. Storia dell'Economia Italiana negli ultimi cento anni. Lavoro e reddito, vol I. Franco Angeli, Milano
  40. Gaffeo E, Gallegati Marco (1997) A frequency domain analysis of business cycle in Italy: 1866-1996. Rass Lav ISCO 14:33-50
  41. Gaffeo E, Gallegati Mauro, Giulioni G, Palestrini A (2003) Power laws and macroeconomic fluctuations. Phys A Stat Mech Appl 324:408-416
  42. Gallegati Marco (1996) Testing output stationarity through its supply components: Italy, 1861-1993. Econ Notes 25:249-260
  43. Gallegati Mauro, Stanca LM (1998) Le fluttuazioni economiche in Italia, 1861-1995. Ovvero, il camaleonte e il virus dell'influenza, Giappichelli, Torino
  44. Giannini C, Lanzarotti A, Seghelini M (1995) A traditional interpretation of macroeconomic fluctuations: the case of Italy. Eur J Polit Econ 11:131-155
  45. Giordano C, Zollino F (2012) A historical reconstruction of capital and labour in Italy, 1861-2011, Mimeo Giugliano F (2011) Crisis? Which crisis? New estimates of industrial value added in Italy during the Great Depression, Mimeo
  46. Golinelli R, Monterastelli M (1990) Un metodo di lavoro per la ricostruzione di serie storiche compatibili con la nuova contabilità nazionale (1951-1989). Nota di lavoro 9001, Prometeia, Bologna Haberler G (1958) Prosperity and depression: a theoretical analysis of cyclical movements. Allen & Unwin, London ISTAT (1957) Indagine statistica sullo sviluppo del reddito nazionale in Italia dal 1861 al 1956. Ann Stat VIII, vol IX, Roma
  47. Lequiller F, Blades D (2007) Understanding national accounts. OECD Publishing, Paris Lucas RE (1977) Understanding business cycles. Carnegie-Rochester Conf Ser Public Policy 5:7-29
  48. Maddison A (1991) A revised estimate of Italian economic growth, 1861-1989. BNL Q Rev 177:225-241
  49. Mattesini F, Quintieri B (1997) Italy and the Great Depression: an analysis of the Italian economy, 1929- 1936. Explor Econ Hist 34:265-294
  50. Nordhaus WD (2002) Productivity growth and the new economy. Brook Pap Econ Act 33:211-265
  51. Onofri P, Paruolo P, Salituro B (1992) Sulle fonti delle fluttuazioni dell'economia italiana: una analisi con sistemi VAR strutturali. Riv Pol Econ 82:33-66
  52. Ormerod P, Mounfield C (2001) Power law distribution of the duration and magnitude of recessions in capitalist economies: breakdown of scaling. Phys A Stati Mech Appl 293:573-582
  53. Rappoport P, Reichlin L (1989) Segmented trends and non-stationary time series. Econ J 99:168-177
  54. Ravn MO, Uhlig H (2002) On adjusting the Hodrick-Prescott filter for the frequency of observations. Rev Econ Stat 84:371-375
  55. Rey GM (ed) (1991) I conti economici dell'Italia. I. Una sintesi delle fonti ufficiali. 1890-1970, Laterza, Roma-Bari Rossi N, Sorgato A, Toniolo G (1993) I conti economici italiani: una ricostruzione statistica, 1890-1990. Riv di Stor Econ 10:1-47
  56. Schlitzer G (1996) Business cycles in Italy: a statistical investigation. Eur J Polit Econ 11:683-698
  57. Sichel DE (1993) Business cycle asymmetry: a deeper look. Econ Inq 31:224-236
  58. Stanca LM (1996) La misurazione del ciclo economico, aspetti metodologici e regolarità empiriche per l'economia italiana (1960-1993). Giorn Econ Ann Econ 51:211-241
  59. Stock JH, Watson MW (1999) Business cycle fluctuations in US macroeconomic time series. In: Taylor JB, Woodford M (eds) Handbook of macroeconomics, vol 1A, 1st edn. North-Holland, Amsterdam, pp 3-64
  60. Syrquin M (1984) Resource allocation and productivity growth. In: Syrquin M, Taylor L, Westphal LE (eds) Economic structure performance-essays in honor of Hollis B. Chenery. Academic Press, Orlando, pp 75-101
  61. Tang J, Wang W (2004) Sources of aggregate labour productivity growth in Canada and the United States. Can J Econ 37:421-444
  62. Temin P (1998) The causes of American business cycles: an essay in economic historiography. In: Fuhrer JC, Schuh S (eds) Beyond shocks: what causes business cycles?. Federal Reserve Bank of Boston, Boston, pp 37-59
  63. Toniolo G (ed) (1978) L'economia italiana 1861-1940. Laterza, Bari Toniolo G (1988) Storia economica dell'Italia liberale (1850-1918). Il Mulino, Bologna Wright I (2005) The duration of recessions follows an exponential not a power law. Phys A Stat Mech Appl 345:608-610
  64. Zamagni V (1993) The economic history of Italy, 1860-1990: recovery after decline. Clarendon Press, Oxford Zamagni V (2007) Introduzione alla storia economica d'Italia. Il Mulino, Bologna Zeileis A, Kleiber C (2005) Validating multiple structural changes models-a case study. J Appl Econ 20:685-690
  65. Zeileis A, Kleiber C, Krämer W, Hornik K (2003) Testing and dating of structural changes in practice. Comput Stat Data Anal 44:109-123
  66. Zeileis A, Leisch F, Hornik K, Kleiber C (2002) strucchange: an R package for testing for structural change in linear regression models. J Stat Softw 7:1-38