Italian fiscal policy review 2015

The macroeconomic and distributive impact of the Italian budget policy implemented in year 2015 is the book focus. On one hand, we argue that fiscal consolidation policies jeopardize GDP growth, already very low, and end up delaying the decrease of public debt/GDP ratio. On the other hand, we argue that implemented policies did not bring about any improvement in Italian distributive inequality, which is one of the highest in Europe. Furthermore, two salient issues regarding fiscal policies are addressed: first, the relationship among tax design, growth and employment. Given the total amount of tax revenues, an increase in tax progressivity is shown to boost employment, and a tax shift from income to consumption to raise growth and employment. The second focus is on the measurement of potential output, which is one of the building blocks of European fiscal governance. Two sections show that the European commission methodology is not only scarcely robust or but also inadequate.