{"title":"Balance-sheet restructuring in Italy: an empirical analysis based on monetary circuit theory","authors":"M. Spanò","doi":"10.4337/ejeep.2022.0087","DOIUrl":null,"url":null,"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.","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.8000,"publicationDate":"2022-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"European Journal of Economics and Economic Policies-Intervention","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.4337/ejeep.2022.0087","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
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.
期刊介绍：
The European Journal of Economics and Economic Policies: Intervention (EJEEP) is a peer-reviewed journal which serves as a forum for studies in macroeconomic theory, economic institutions and economic policies. The managing editors aim for productive debates involving one or more variants of heterodox economics, and invite contributions acknowledging the pluralism of research approaches. The submission of both theoretical and empirical work is encouraged. The managing editors contend that a wide variety of institutional and social factors shape economic life and economic processes. Only a careful study and integration of such factors into economics will lead to theoretical progress and to competent economic policy recommendations. This was clearly demonstrated by the inadequacy of orthodox economics, based on neoclassical foundations, to provide suitable explanations and responses to recent financial and economic crises.
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