Italy: Toward a Growth-Friendly Fiscal Reform

By Michal Andrle, Shafik Hebous, Alvar Kangur, Mehdi Raissi

March 16, 2018

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Michal Andrle, Shafik Hebous, Alvar Kangur, and Mehdi Raissi. Italy: Toward a Growth-Friendly Fiscal Reform, (USA: International Monetary Fund, 2018) accessed September 19, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Published in late 2017, the Italian medium-term fiscal plan aims to achieve structural balance by 2020, although concrete, high-quality measures to meet the target are yet to be specified. This paper seeks to contribute to the discussion by (i) assessing spending patterns to identify areas for savings; (ii) evaluating the pension system; (iii) analyzing the scope for revenue rebalancing; and (iv) putting forward a package of spending cuts and tax rebalancing that is growth friendly and inclusive, could have limited near-term output costs, and would achieve a notable reduction in public debt over the medium term. Such a package could help the authorities balance the need to bring down public debt and, thus, reduce vulnerabilities while supporting the economic recovery.

Subject: Expenditure, Labor, Pension spending, Pensions, Retirement, Tax allowances, Taxes, Wages

Keywords: Dynamic stochastic general equilibrium models, Early retirement, Global, Growth-friendly fiscal policy, Internal rate of return, IP regime, Italy, Local government, Low income, Nominal wage, Pension spending, Pensions, Potential GDP, Public education expenditure gap, Public pensions, Public spending, Rationalizing tax expenditure, Replacement rate, Retirement, Retirement age, Stability law, Tax allowances, Tax burden, Tax credit, Wages, WP

Publication Details

Pages:

38
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/059
Stock No:

WPIEA2018059
ISBN:

9781484347584
ISSN:

1018-5941

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