Codogno, Lorenzo (2024) Italy's Superbonus 110%: messing up with demand stimulus and the need to reinvent fiscal policy. Working Paper (12/2024). LUISS Institute for European Analysis and Policy.
Full text not available from this repository.Abstract
Since the Global Financial Crisis in 2008-2009, there has been flourishing literature on the role of fiscal policy in stimulating demand when the economy is in a deep recession. Past studies suggest the stimulus may make sense if it is temporary, targeted, and withdrawn quickly. However, since the pandemic, there has been a case for going big, when necessary, to prop up expectation, confidence and demand. This was exemplified by Italy’s Superbonus 110%, a generous subsidy scheme to allow the energy-efficient renovation of residential buildings, which emerged as a significant policy response to the economic challenges posed by the pandemic. I argue that the Superbonus, while having a respectable economic aim, ended up impinging on the same sectors supported by the EU-funded investment plan, resulting in significant capacity constraints and misallocation of resources. Its excessive generosity brought a massive deterioration in public finances, while its returns in terms of economic growth were short of expectations. I conclude by drawing some policy lessons from Italy’s experience, on what should be preserved and avoided, and on a possible reinvented role for fiscal policy in deep economic crisis.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Official URL: | https://leap.luiss.it/publication-research/ |
| Additional Information: | © 2024 The Author |
| Divisions: | European Institute |
| Subjects: | H Social Sciences > HJ Public Finance H Social Sciences > HD Industries. Land use. Labor |
| JEL classification: | E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination H - Public Economics > H6 - National Budget, Deficit, and Debt > H60 - General H - Public Economics > H1 - Structure and Scope of Government > H10 - General |
| Date Deposited: | 10 Oct 2024 09:24 |
| Last Modified: | 10 Oct 2024 09:24 |
| URI: | http://eprints.lse.ac.uk/id/eprint/125681 |
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