Based on 25 years (1995–2019) of fully integrated sectoral data, this study builds on monetary circuit theory to examine the Italian experience of growing private debt followed by a long recession with balance-sheet restructuring. It is argued that this process cannot be identified as a typical balance- sheet recession. After the global financial crisis of 2007–2008, Italian firms increased financial sources from economic activities by retaining earnings, lowering wages, and disinvesting. Their deleverage, however, rested largely on the overall financial wealth reallocation that occurred after 2012, which was induced by monetary and fiscal policy, creating the conditions for households to increase net saving and to channel cumulated wealth from government securities and money balances towards equities.

Balance sheet restructuring in Italy: an empirical analysis based on monetary circuit theory

Marcello Spanò
2022-01-01

Abstract

Based on 25 years (1995–2019) of fully integrated sectoral data, this study builds on monetary circuit theory to examine the Italian experience of growing private debt followed by a long recession with balance-sheet restructuring. It is argued that this process cannot be identified as a typical balance- sheet recession. After the global financial crisis of 2007–2008, Italian firms increased financial sources from economic activities by retaining earnings, lowering wages, and disinvesting. Their deleverage, however, rested largely on the overall financial wealth reallocation that occurred after 2012, which was induced by monetary and fiscal policy, creating the conditions for households to increase net saving and to channel cumulated wealth from government securities and money balances towards equities.
2022
2022
https://www.elgaronline.com/view/journals/ejeep/aop/article-10.4337-ejeep.2022.0087/article-10.4337-ejeep.2022.0087.xml
sources of finance, debt, sectoral analysis, money reflux, economic policy
Spanò, Marcello
File in questo prodotto:
File Dimensione Formato  
2022_EJEEP.pdf

accesso aperto

Tipologia: Versione Editoriale (PDF)
Licenza: Creative commons
Dimensione 512.98 kB
Formato Adobe PDF
512.98 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11383/2136610
 Attenzione

L'Ateneo sottopone a validazione solo i file PDF allegati

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
social impact