Capital Inflows, Current Accounts and the Investment Cycle in Italy: 1861–1913
ISBN: 978-1-78441-782-6, eISBN: 978-1-78441-781-9
Publication date: 22 April 2015
Abstract
Relying on a new dataset, this paper examines the genesis of current account fluctuations and the investment cycle in Italy. We perform a Granger causality test that shows that the persistent current account deficits in the years from unification to World War I were generated by variations in capital inflows, as hypothesized by Fenoaltea, and not by the dynamics of GDP, as in the Bonelli–Cafagna model. Finally, we show that these capital inflows prompted an industrial investment cycle in equipment and machinery but not – as claimed by Fenoaltea (1988) – a general investment cycle which included also construction and more volatile components of investment. These patterns held under both fixed and floating exchange rate regimes.
Keywords
Citation
Pistoresi, B. and Rinaldi, A. (2015), "Capital Inflows, Current Accounts and the Investment Cycle in Italy: 1861–1913", Research in Economic History (Research in Economic History, Vol. 31), Emerald Group Publishing Limited, Leeds, pp. 241-261. https://doi.org/10.1108/S0363-326820150000031005
Publisher
:Emerald Group Publishing Limited
Copyright © 2015 Emerald Group Publishing Limited