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The impact of monetary and fiscal policy on the Italian economy and banking industry

Alessandra Amici, Vincenzo Chiorazzo, Vincenzo D’Apice, Pierluigi Morelli
September 2016 - n. 9
Jel codes: G21, G28

In this study we use two macro-econometric models to estimate the impact of Euro Area monetary and fiscal policies both on the real economy and on the Italian banking industry. We start by calibrating a baseline scenario for the 2015- 2018 period with on-going policies and then we compare it with: i) a counterfactual scenario with no ultra-accommodative monetary policy; ii) an alternative scenario in which fiscal expansion plays a role. Our results highlight that the effect of the Ecb's ultra-expansionary monetary policy is remarkable: at the end of 2018, Euro Area Gdp is 2.9% higher than in a scenario without such a policy. The impact on the Italian banking system is also positive, with a cumulative higher profit of 7.7 billion.

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