Ricerc@Sapienza

'The Holy See cannot be cooperating with a practice that is clearly harming the health of people'. This is the reason behind Pope Francis banning the sale of tobacco products inside the Vatican in January 2018. Just outside the Holy See, in Italy, cigarette sales produce around €13 billion of fiscal revenues every year. In Italy, proposals to increase tobacco taxation are systematically rejected and new tobacco company plants have been officially inaugurated in recent years by representatives of State.

The financial and economic crisis, associated with the longest and deepest recession since the end of World War II, broke out in the United States during the second half of 2007, and then spread to the entire world economy; Europe was hit in 2008. Data on industrial production and GDP documented a rapid and large fall in economic activity.
In spite of some encouraging signs of an inversion of the economic cycle during the second half of 2009 and the first half of 2010, the strength of the recovery was moderate and considerably varying among EuroArea countries.

This paper investigates qualitatively and quantitatively the fiscal policies adopted in Italy in response to the COVID-19 crisis. We assess the rationale of the policies in light of the characterizing features of the business and household sectors and of the state of public budgets. We then evaluate the impact of the policies through a calibrated model of the Italian economy featuring a comprehensive specification of taxes, transfers, and subsidies.