more austerity isn’t going to convince the bond markets that Italy is just fine, let alone cut interest rates sufficiently to make contractionary policies expansionary. In fact, austerity — at least if not accompanied by major policy changes in Frankfurt — is probably self-defeating, because it will hurt the Italian economy more than it helps the short-term budget picture.
Italy faces an immediate crisis of self-fulfilling panic, and a huge medium-term adjustment problem as it tries to get costs and prices back in line with core Europe. The only plausible way to resolve these problems is via much more liberal policy from the ECB, in the form of bond purchases now and an implicit (but understood) willingness to let inflation run a bit high for an extended period.
"— L’economista Paul Krugman sugli sforzi del “tecnocratico” governo-Monti: l’austerity probabilmente non salverà l’Italia né servirà all’Europa, a meno che non cambi la politica della BCE (ad oggi, wishful thinking).
(Fonte: The New York Times)
