The response to the crisis: an international confrontation

"The rest is quite evident and objective, that is, the fact that Italy has made the greatest fiscal policy effort in Europe, second only to that of Germany, to cope with the coronavirus".

Roberto Gualtieri, Rome, 25 June 2020.

For heaven's sake, it would be strange if a minister spoke ill of the work of his government, and in particular of his ministry. However, with all due respect, the Minister's arguments do not seem to live up to his ambitions.

Meanwhile, if things were as he says, it would not be understood why in the forecasts of the International Monetary Fund (which you find here and which I report below) Italy is the country with the most catastrophic prospects:

In fact, if France (to choose a neighboring country) had made a significantly less effort than ours, it would not be understood why things would have been marginally better for us than for us.

So, as if to say, Gualtieri's argument could be refuted by pointing out that if really the effort had been great, evidently it would have been made in the wrong direction. All the macroeconomics manuals would then have to be rewritten.
Fortunately, however, the argument is false: the macroeconomics that we know continues to be valid, the figures are different.
The summary can always be found on the International Monetary Fund website, from which I draw this graph:
In short, the red bars are the amount (in relation to GDP) of the budget measures adopted in response to the crisis, while the blue ones refer to loans and guarantees (the "firepower", ie the money that should put banks). Here things go a little differently: in terms of budgetary maneuver, that is, simplifying, of money that the State puts in, Italy's response, in relation to GDP, is among the weakest, with that of France, which is a little less weak (which explains why things are expected to go wrong in France too, but less than here). On the promises side (loans that the State guarantees, without putting banks in a position to disburse them) we, or rather: Gualtieri, on the other hand, is unsurpassed. The tallest blue bar is his, and I think that makes him proud. I don't know how calm the entrepreneurs are, but this is his problem, given that he is in government for now, who knows how to do it …
If you are interested in the details, they are on the Monetary Fund page dedicated to the responses to the crisis by the various countries . At the "I" of Italy you can find this summary (which should be known to you and whose truthfulness I can confirm):
So: we started with the 25 billion of Cura Italia, to which (after the parenthesis of Liquidity which was concerned with guarantees), the 55 billion of the relaunch (which is in conversion) was added on 15 May: total 80 billion, or 4 , 6% of GDP (1.4 + 3.2).
At the "F" of France we find this instead:
where it is said that the authorities ordered an intervention of 110 billion in April (which is more or less where we will arrive at the end of July ), equal to 5% of GDP, extending an initial measure of 45 billion voted in March. Note that we are keeping out the collateral discourse here too. Understand that 5% of GDP in April is different from 1.4 in March plus 3.2 in May.
And how did it go in Germany?
At the "G" of Germany we find this:
A 156 billion "appetizer" (4.9% of GDP), which was served on 23 March, to which 130 billion were added on 3 June (the famous reduction in VAT that our government only aped, creating more harm than anything else).
If desired, we can go to the "N" of … Holland (Netherlands):
where you see that between spending measures and postponements of revenue you get to 7.9% of GDP.
Of course it is difficult to make real-time comparisons, given the uncertainties of the regulatory frameworks (it is necessary to distinguish between when the measures are announced and when they are implemented, and between how the measures "start" and how "arrive"), and it is among other things on the way of announcing them, these measures, which our Government has not shone (like the VAT affair, but also those of the various postponements of tax deadlines, have amply demonstrated).
Of course, in this analysis we stayed within the Eurozone for homeland charity and to consider directly comparable situations.
Conclusions: our country has certainly made a great effort. That of enduring an inefficient government, the expression of a quarrelsome majority detached from reality.
I remember well the face of some senators of the PD, polite and good people whose name I obviously do not mention, when, after the approval of the 25 billion deviation (for Cura Italia), they had to take note of the 156 billion put in field from Germany. They were amazed: the 156 of Germany, compared to our GDP, corresponded approximately to the 80 that we have put together so far, which in turn were close relatives of the 100 that we were asking for. When we asked them, they looked at us like crazy. But after Germany had done what we asked at our house at home, her colleagues were dazed: "Eh, but we hadn't realized …". They, in fact, no. Unfortunately, we do, but now they are in charge. If at least they would listen to us …

This is a machine translation of a post (in Italian) written by Alberto Bagnai and published on Goofynomics at the URL on Thu, 25 Jun 2020 17:34:00 +0000. Some rights reserved under CC BY-NC-ND 3.0 license.