Marco Giuli - Research Fellow, Madariaga - College of Europe Foundation
Madariaga Paper, Vol. 4, No. 1 (Jan., 2011)
The aim of this paper is to suggest that some eurozone countries which dealt relatively well with the financial downturn due to a high rate of households savings will no longer be able to rely upon this cushion. Such a cushion worked well in Italy since a relatively low stock of private debt, along with conservative behaviour of the credit institutions, prevented an insulated financial system from collapsing with limited impact on public finances. However, a clear trend of erosion of private savings experienced by Italy over the last decades suggests that this might not last forever because of fundamental changes in cultural models and labour market institutions.
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