Italy: Toward a Growth-Friendly Fiscal Reform
IMF Working Papers, March 16, 2018
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- Italy: Toward a Growth-Friendly Fiscal Reform
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Bibliographic details
- Authors: Michal Andrle, Shafik Hebous, Alvar Kangur, Mehdi Raissi
- Published: March 16, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484347584.001
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.
- The paper seeks to contribute by:
- assessing spending patterns to identify areas for savings;
- evaluating the pension system;
- analyzing the scope for revenue rebalancing;
- 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.
Major analytical themes and findings
- Spending assessment:
- Identifies patterns of public spending with potential areas for savings (detailed measures not specified on this page).
- Pension system evaluation:
- Examines public pensions, replacement rates, retirement age, early retirement, and related pension spending topics.
- Revenue rebalancing:
- Analyzes scope for rationalizing tax expenditure, tax allowances, tax credits, and rebalancing the tax burden.
- Growth-friendly policy package:
- Proposes combining spending cuts with tax rebalancing to be growth friendly and inclusive, limiting near-term output costs and reducing public debt over the medium term.
Policy recommendations (high-level)
- Pursue targeted spending savings identified through spending-pattern assessment.
- Reform pension arrangements to address pension spending and retirement incentives.
- Rationalize tax expenditures and rebalance revenue sources to improve fiscal sustainability while supporting growth.
- Design a combined package of spending cuts and tax rebalancing that is growth friendly, inclusive, and minimizes near-term output costs.
Publication and metadata
- Title: Italy: Toward a Growth-Friendly Fiscal Reform
- Authors: Michal Andrle, Shafik Hebous, Alvar Kangur, Mehdi Raissi
- Date: March 16, 2018
- Published: IMF Working Papers
- Series: Working Paper No. 2018/059
- Issue: 059
- Volume: 2018
- Pages: 38
- DOI: https://doi.org/10.5089/9781484347584.001
- Stock No: WPIEA2018059
- ISBN: 9781484347584
- ISSN: 1018-5941
- Subjects: 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
Italy: Toward a Growth-Friendly Fiscal Reform — IMF Working Paper No. 2018/059 (Michal Andrle, Shafik Hebous, Alvar Kangur, Mehdi Raissi), March 16, 2018.
Content in this bundle
- Italy: Toward a Growth-Friendly Fiscal Reform, WP/18/59, March 2018