Piero Esposito

Explaining the Performance of Italian Exports during the Crisis: (Medium) Quality Matters

A recent study argues that the contraction in total trade that occurred during the crisis was mainly driven by the fall in high quality goods, which should have higher income elasticity owing to a non-linear Engel curve. Our aims are, on the one hand, to test the quality Engel curve assumption for EU15 imports from Italy and, on the other hand, to ascertain whether a break in income elasticities – either temporary or permanent – occurred during the global financial crisis as a result of the changing preference for quality of consumers in the old EU member states. We test these hypotheses by estimating income and price elasticities of EU imports of consumption goods from Italy for both volumes and market shares. The contribution of this paper is twofold. First, we introduce a medium quality category, allowing us to make a more detailed reading of the stylised facts about the performance of Italian trade during the crisis. Second, we perform three different versions of the mean group estimator. Our results are consistent with the assumption of a change in the preference for quality. This change may be due either to a shift in consumption from high to medium quality Italian products or to the higher quality, actual or perceived, of Italian medium quality goods compared with the varieties imported from the rest of the world.

The Determinants of Macroeconomic Imbalances in the Euro Area: The Role of External Performances

In this chapter we analyzed the causes of macroeconomic imbalances in the euro area by assessing the external performances of the four main European economies: Germany, Italy, France and Spain. We propose two main explanations for such imbalances: very successful internationalization strategies of the German firms, especially toward Central and Eastern Europe (CEECs), on the one hand, and Emerging Markets, particularly China, on the other; the role of the Euro and Economic monetary unification (EMU). The results from an econometric test of these determinants confirm our assumptions. Germany has benefited mostly from internationalization activities with CEECs and the penetration of Emerging Markets. At the same time it more benefited from the creation and functioning of the EMU.

Italia e Germania: due modelli di crescita export-led a confronto

The aim of the paper is to compare the growth and external performances of Germany and Italy in the 1999-2009 ten-year period, i.e., from the advent of European Monetary Union (EMU) up to the financial crisis. Although both economies have been dubbed export-driven growth models in the past, the trajectories of the two countries have diverged in terms of both trade flows and trade balances over the past decade. In Germany, the positive contribution of net exports to GDP growth was the main driver of its higher growth dynamics compared to Italy. Given that traditional cost-competitiveness can only partly account for these divergent external performances, the paper considers two additional factors. First, the increasing tendency of German firms to fragment production internationally, notably in neighbouring Central and Eastern European countries, and, second, the vital role played by the single euro currency and European Monetary Union. The econometric analyses conducted underscore the significance of both those factors in spurring Germany’s trade surplus above that of Italy. In terms of industrial and economic policy, the results of the analysis suggest that the German growth model can be used as an EU benchmark solely in terms of supply side adjustments, given that the high dependency on a current account surplus that well exceeds that of the Euro area prevents it from being extended to the other eurozone countries.