Ricerc@Sapienza

The economic divergence between the South and the North of Italy is widely recognized and is known as `Italian dualism'. Since the aftermath of World War II, the macroeconomic indicators of the two Italian areas -notably, the GDP, the private investment, the export and the employment rate- show a jumpy process of convergence/divergence. The recent era of economic stagnation and the economic downturn following the Global Financial Crisis have emphasized the economic gap between the two Italian areas. Currently, the South of Italy has one of the highest levels of material deprivation in Europe, whereas the North has one of the lowest (OECD, 2019). Despite the relevance of the issue, the recent macroeconomic literature offers only a few and shyly attempts that address the understanding and the policy consequences of the Italian dualism. For instance, while the 80% of both EU and national resources for economic and social rebalancing actions are currently devoted to Italian southern regions, the policy-benchmark on the effects of fiscal policy relies exclusively on national fiscal multipliers. One of the reason behind the lack of a consolidated evidence is that local-level time series are limited, short and have a too low frequency. This project aims at filling this gap by offering the opportunity to build a unique dataset and to explore the subject matter in several ways. First, by exploiting a source of regional data from SVIMEZ, the project aims at rebuilding regional time series from 1945 to 2020. Second, by implementing mixed-frequency techniques the regional series will move from the annual to the quarterly frequency. Third, the new dataset will be employed to estimate a structural macroeconomic model for Italian regions accounting for regional heterogeneity in the development process. Therefore, the ultimate goal will be to use this framework to shed a new light on the effectiveness of fiscal policy in the Italian regions.