Table of Contents

Constitutional Economics and Public Institutions

Constitutional Economics and Public Institutions

New Thinking in Political Economy series

Edited by Francisco Cabrillo and Miguel A. Puchades-Navarro

This extensive book explores in detail a wide range of topics within the public choice and constitutional political economy tradition, providing a comprehensive overview of current work across the field.

Chapter 12: The actual role of government intervention for the recovery of the Italian economy

Gian Cesare Romagnoli

Subjects: economics and finance, public choice theory, politics and public policy, public choice


The decline of public intervention, which began in the UK and spread to the United States and to most European countries in the early 1980s, started in Italy, as in China, about twelve years later. As neutral finance saw its end with the Great Depression of the 1930s, likewise the Keynesian model of economic policy, which had been unable to deal with the stagflation of the 1970s, gave way to the pure cycle economic model which offered a rationale for it. After almost 40 years, the global financial crisis, originated by the subprime mortgages in the United States, and still running in Europe, has again raised serious questions about the markets’ self equilibrating capability. The bailing out of financial institutions has given rise to the reappraisal of the economic debate on State intervention delivered into the economy not only through market regulation but also through the public production of goods and services.

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