Exchange Rate Regimes and Reserve Policy on the Periphery: The Italian Lira 1883-1911

Real Exchange Rates, Trade, and Growth: Italy 1861-2011

“…Following their study, dynamic stochastic general equilibrium models usually calibrate at around 0:5. 13), ( 16) and (20) reveals that if wi solves the model (together with the other endogenous variables) for given din and dni (and given all the other parameters), then, for any > 0, all the equations also hold if w 0 i = wi, d 0 in = din and d 0 ni = dni= replace, respectively, wi, din and dni. Uniqueness of the equilibrium grants that w 0 i = wi is the domestic wage that solves the model with the new trade barriers d 0 in and d 0 ni .…”

“…where q and w are constants. 19 These equations show: the price of the bundle of the tradeable goods relative to that of the non-tradeable goods (equation ( 4)); the size of the non-tradeablegoods sector relative to the tradeable-goods sector (equation ( 5)); the demand for the bundle of non-tradeable goods relative to that of the tradeable goods (equation ( 6)); aggregate productivity of the non-tradeable-goods sector relative to that of the tradeable-goods sector (equation ( 7)); 20 real GDP, i.e. aggregate production of non-tradeable and tradeable goods (equation ( 8)); 21 the real wage (equation ( 9)), that, given L i , measures welfare (utility is w i L i =p i in the equilibrium).…”

“…Equilibrium. To sum up, the full general equilibrium is given by the solution of equations (10) ( 11), ( 13), ( 16) and (20), which form a system of m 2 + 4m non-linear equations in m 2 + 4m unknowns (where m is the number of countries), which are:…”

“…Note that the intuition according to which a depreciation makes the tradeable-goods sector more competitive and raises the size of this sector depends on the exact value of the elasticity of substitution between tradeable and non-tradeable goods. If > 1, then the absolute size of the tradeable-goods sector rises due to the increase in employment (equation (20)), but the relative size of this sector (with respect to the non-tradeable-goods sector) declines (equation ( 14)). If < 1, then both the absolute and the relative size of the tradeable-goods sector rise.…”

Economic Theory and Banking Regulation: The Italian Case (1861-1930s)

“…standard, the exchange rate between the franc and the lira -the main reference for policywas essentially fixed and the government embraced fiscal and monetary rectitude, thus shadowing gold (Cesarano, Cifarelli and Toniolo 2009). The pre-WWI period was also characterized by the expansion of mixed banks, which came to play a leading role in corporate finance.…”