رکود بزرگ در ایتالیا : محدودیت های تجاری و انعطاف ناپذیری دستمزد واقعی

In Italy, as in many other countries, the years immediately after 1929 were characterized by a major slowdown in economic activity. We argue that the depth and duration of the crisis cannot be explained solely by productivity shocks. We present a model in which trade restrictions together with wage rigidities produce a significant slowdown in economic activity. The model is also consistent with evidence from sectoral disaggregated data. Our model predicts that trade restrictions can account for about one-half of the slowdown observed in the data while real wage rigidities can account for one-fourth of it. Journal of Economic Literature Classification Numbers: E30, F40, N24.

The economic recession experienced by many countries in the late 1920s and early 1930s—the Great Depression—also affected Italy. Despite the lower degree of industrial development in the Italian economy, the dynamics of the depression in Italy were not very different from those of more industrialized countries like England, France, and the United States. Although the fall in aggregate production was smaller, the contraction in industrialproduction was as severe as in more industrialized countries. More broadly, the key features of the Italian depression can be summarized as follows: (i) Persistent decline in international trade. (ii) Large fall in hours worked and production in the tradable sector, but negligible changes in the nontradable sector. (iii) Large fall in investment. (iv) Stability of the real wages. A striking aspect of the Great Depression is that it involved many countries during the same time period. This consideration leads us to investigate possible mechanisms of international transmission. Among these mechanisms, the fallin internationaltrade is the obvious candidate. In fact, all countries affected by the Great Depression also experienced a drastic and persistent fall in foreign trade. Finding the causes of the fall in foreign trade is not difficult. Many countries, including Italy, implemented protectionist policies starting in the late 1920s. These policies took several forms, such as import tariffs, currency control, and quota restrictions. The consequence was a dramatic fall in internationaltrade. Can this fallin internationaltrade explain the Great Depression in Italy? In this paper we argue that the drop in international trade was indeed a major cause of the economic downturn in Italy in the 1930s, and that the slump was amplified by the rigidity of the real wages. We develop an open-economy model with two sectors of production: the tradable sector and the nontradable sector. The tradable and nontradable productions are then combined to produce consumption and investment in the two sectors. A key property of the modelis that foreign imports are an important input in the production of investment in the tradable sector. This assumption is based on the import structure of Italy in the 1920s and 1930s, where a significant share of nonfarm imports were investment goods for the industrialsector. This dependence on the import of investment goods—which derives from the lower development of the industrial sector in Italy—was an important mechanism of transmission of the international economic crisis in Italy. Using a calibrated version of the model , we show that the contraction in the foreign trade can account for features (ii) and (iii) of the Italian depression listed above. The role played by the stability of the realwages (iv) has been to amplify the consequences of the trade contraction. Our work is related to and has been inspired by the papers of Cole and Ohanian (1999, 2001), who analyzed the Great Depression in the United States. A few authors have analyzed the Great Depression in Italy but none

The Great Depression is the greatest macroeconomic shock that hit industrialized countries in this century, and its full understanding is still a challenge to economists. The simultaneous impact of the depression on so many countries led us to investigate whether some mechanism of international transmission spread the affliction. More specifically, we investigated the extent to which the fallin internationaltrade was responsible for the economic depression in Italy. Our results suggest that increasing barriers to trade, together with real wage rigidities, can explain a large proportion of the economic downturn experienced by Italy at the beginning of the 1930s. Given this result, it would be interesting to investigate whether the same mechanism could explain the recession experience of other countries during the same period. In particular, we question whether the failure to maintain an internationalenvironment of free trade may have been the main cause of the diffusion of the Great Depression worldwide. We leave this and other related questions for future research.