Italian Debt Crisis? The Sick Man of Europe?

 

This page is currently UNDER CONSTRUCTION, but you can start thinking about the Questions below while viewing the video above and the State-Space Model outputs below.

This is what chatGPT reports as the Causal Model:

It is a negative feedback loops because AUSTERITY (fiscal discipline) reduces Growth and, as in the US,

Growth increases DEBT.

Notes

You can run the ITL20 Model in R-code (here). For more of my posts see Blog Roll: Italy, the Boiler Plate and the Introduction to State Space Models.

Questions

1. If Italy is becoming a Steady State Economy, how will that affect DEBT?

Debt Index Codes

Debt Crisis data were taken from the World Development Indicators.

Measurement Model

AIC Statistics

ITL20 TECHP Model

One way for Italy to reduce DEBT is to increase Technical Productivity (TECHP) in the model above.

Debt Index Measurement Model