Gianni Toniolo

Economic Growth in Europe since 1945

This compelling volume re-examines the topic of economic growth in Europe after the Second World War. The contributors approach the subject armed not only with new theoretical ideas, but also with the experience of the 1980s on which to draw. The analysis is based on both applied economics and on economic history. Thus, while the volume is greatly informed by insights from growth theory, emphasis is given to the presentation of chronological and institutional detail. The case study approach and the adoption of a longer-run perspective than is normal for economists allow new insights to be obtained. As well as including chapters that consider the experience of individual European countries, the book explores general European institutional arrangements and historical circumstances. The result is a genuinely comparative picture of post-war growth, with insights that do not emerge from standard cross-section regressions based on the post-1960 period.

Economic growth in Europe since 1945: Postwar growth: an overview

Introduction One of the most difficult and intriguing tasks of a theory of economic growth is to combine both the disruptive and the integrative, the qualitatively changing and the quantitatively steady, aspects of the process. ( Kuznets, 1965: 23 ) We still refer to the past fifty years as the ‘postwar’: this is perhaps the best tribute to the fact that the ‘second Thirty Years War’ (1914–1945) marked a major watershed in the history of mankind. So much so that it proved to be a major intellectual watershed as well. In fact, until fairly recently, 1945 often marked the borderline of historical research, more recent decades being considered as the playing ground for journalists, political scientists and sociologists. Only the boldest, or most inconsiderate, scholars entered the field, and they did so at their own risk. The same can be said of economic historians: with few exceptions, they have been reluctant to apply the tools of their trade to the ‘postwar’ period, more often than not leaving it as the domain of applied economists. Things are changing, however, and the half century following the end of the Second World War is now increasingly seen as being ripe for historical investigation, much beyond the Marshall Plan years that have attracted much recent attention. This chapter aims at reviewing the performance of the European economy since 1945 in a longer-run perspective, which sees the period from 1913 to 1973 as being an exceptional one in the history of ‘modern economic growth’, in that it departed from the secular trend first (1913–45) by under-and then (1945–73) by overperforming. In this chapter, the European economy is tentatively seen as an aggregate, at least in fieri .

IS THE KUZNETS CURVE STILL ALIVE? EVIDENCE FROM ITALIAN HOUSEHOLD BUDGETS, 1881 1961

This paper investigates secular changes in the distribution of personal expen-diture in Italy over the period 1881-1961. To do so, the authors constructed a new dataset, the Italian Household Budgets Database (IHBD), consisting of 4,370 family-level budgets. Methodologically, this paper improves upon most existing studies in that: (i) the entire distribution of the expenditure curve is in-vestigated, rather than just sections or likely determinants of it; (ii) confidence intervals are attached to the point estimates (Gini coefficients); and (iii) signifi-cance tests ascertain that the estimated path of inequality is not due to sam-pling variation. The secular trend in consumption expenditure inequality is found to be downward sloped. Inequality declines sharply at the beginning of the century, increases during the great depression, and falls again thereafter. These findings cast considerable doubt on the existence of an inverted-U shaped Kuznets curve, as far as the Italian case is concerned.

Monetary Union, institutions and financial market integration: Italy, 1862–1905

Abstract Years into the single currency, EMU financial markets are not fully integrated. We argue that the phenomenon can be better understood by looking at financial markets’ behavior in the wake of Italy’s monetary unification (1862). Variables such as the spread of the telegraph, trade volumes, and the diffusion of the ‘single currency’ fail to explain why it took 25 years for prices across regional stock exchanges to converge. A single Italian financial market appeared only when the State prevailed upon local vested interests by enforcing nation-wide financial market legislation.

Unemployment in the 1930s: The Case of Italy

The historiography of the Great Depression is still an infant industry in Italy. The number of books and papers explicitly dealing with it is probably within the single figure range. The reasons for this poverty of research, in an area that in the past decade has become important and fashionable in most other countries, are deeply rooted in the historical culture that sprang from the Resistance and the Reconstruction. For three decades after the end of the Second World War historical research centred on explaining the origins of Fascism, the reasons for its long survival and the causes of its eventual failure. These problems were either studied in broad terms such as the “nature” of Fascism and its “continuity” or “discontinuity” with the previous history of Italian capitalism, or were investigated within the long-standing methodological tradition of local history. Only in the 1970s did the political and, to a lesser extent, the economic life of the country during the 1920s and the 1930s begin to attract standard historical research. This was partly a result of the debate originated by De Felice’s monumental and controversial biography of Mussolini. However, the macroeconomics of the Great Depression is still a largely unexplored area, within which the field of employment, unemployment and labour policies has remained almost untouched.

The Past and Future of Central Bank Cooperation

This book explores the past and future of central bank cooperation. In todays global economy, the cooperation between central banks is a key element in maintaining or restoring monetary and financial stability, thereby ensuring a smooth functioning of the international financial system. In this book, economists, historians, and political scientists look back at the experience of central bank cooperation during the past century - at its goals, nature, and processes and at its successes and failures - and draw lessons for the future. Particular attention is devoted to the role played by central bank cooperation in the formulation of minimum capital standards for internationally active banks (the Basel Capital Accord, Basel II), and in the process of European monetary unification and the introduction of the Euro.

Reconsidering Japanese deflation during the 1920s

Abstract This paper takes issue with a mainstream view according to which the alleged poor performance of the Japanese economy during the 1920s was the result of the deflationary macroeconomic policies: such policies were repeatedly announced but not implemented until 1929. Price deflation is explained with a model showing that the announcement of a future appreciation of the exchange rate will lead to a decline in the price level. Both in international perspective and in light of later Japanese events, it is difficult to hold a negative view of the inability of Japanese governments to implement consistent deflationary policies during the 1920s.

Exchange Rate Regimes and Reserve Policy on the Periphery: The Italian Lira 1883-1911

The three exchange rate regimes adopted by Italy from 1883 up to the eve of World War I — the gold standard (1883-1893), floating rates (1894-1902), and “gold shadowing” (1903-1911) — produced a puzzling result: formal adherence to the gold standard ended in failure while shadowing the gold standard proved very successful. This paper discusses the main policies underlying Italy’s performance particularly focusing on the strategy of reserve accumulation. It presents a cointegration analysis identifying a distinct co-movement between exchange rate, reserves, and banknotes that holds over the three sub-periods of the sample. Given this long-run relationship, the different performance in each regime is explained by the diversity of policy measures, reflected in the different variables adjusting the system in the various regimes. Italy’s variegated experience during the gold standard provides a valuable lesson about current developments in the international scenario, showing the central role of fundamenals and consistent policies.

Railways and Economic Growth in Mediterranean Countries: Some Methodological Remarks

The complaint that ‘these Italian trains go at about the rate of an American funeral’ must have been rather common in the 1870s and 1880s when comtemporaries often criticised the Italian railway network for widespread inefficiency combined with high rates both for passengers and freight (1). As late as the early 1900s it was apparently more convenient to deliver goods by wagon rather than by rail up to distances of about one hundred and twenty miles (2). Almost any town in central or southern Italy is within that distance from a good seaport. Even in the Po Valley, rivers and canals could offer a viable alternative to railways.

The Mediterranean Response to Globalization before 1950. Edited by Sevket Pamuk and Jeffrey Williamson. London and New York: Routledge, 2000. Pp. xvii, 430.

Divergence, rather than convergence, has been the name of the game in worldwide “modern economic growth,†at least up to the 1980s. This empirical observation no longer puzzles economists, as it did thirty years ago. In the last two decades, we have taken a more sophisticated approach to the issue of the long-run relative performance of pioneers and latecomers, of core and periphery, of rich and poor countries. If we are currently able to talk of “conditional convergence,†“convergence clubs,†and the like, this is the result of a tremendous cross-fertilization between the so-called “new growth theory,†the pioneering work of Moses Abramovitz and a few others, and new approaches in global economic history. Amongst the latter, the monumental research program of Jeffrey Williamson stands in a class of its own. Thanks to his intellectual inputs and coordination efforts we have rediscovered the so-called “first globalization†and the backlash against it, and are thus better equipped to understand the causes and effects of the current globalization wave, and thus produce plausible scenarios for its future course.