At the Origins of the NAIRU : Short-Term Economic Policy and the Development of the First Italian Macroeconometric Models.

Abstract

The purpose of this paper is to reconsider the features of the main Italian macroeconometric models, developed from the early 1960s until the first half of the 1970s. The models have been examined pursuing two objectives: a) to verify if they have been elaborated as short run articulation of long run macroeconomic programming; b) to assess if they reflect the problems of medium-term policy brought to the attention of the debate arising from the article by Modigliani and La Malfa 1966. We have examined the structure of the following models: the model of the Preliminary Report of the Bank of Italy 1963; the M1BI model 1970; the model of the University of Bologna 1970-1976. Our analysis shows that the stimulus that came from the economic conjuncture and theoretical debate of the early 1960s significantly influenced relevant features of the first Italian econometric models. However, a model able to give answers to the issues raised by that debate was elaborated only in the course of the first half of the 1970s.