The Italian fiscal sustainability in a long-run perspective

In this paper, we analyze the relationship between government expenditures and revenues for Italy over the period 1862–2013. The analysis of the expenditures-revenues nexus is also relevant from the point of view of fiscal sustainability. Our empirical strategy adopts the wavelet analysis approach. The empirical evidence demonstrates the relevance of the frequency domain in analyzing the relationship between government expenditures and revenues, which may lead to alternative policy implications. Indeed, after the recent economic crises, guaranteeing its own financial stability is an increasingly difficult task for a highly indebted government like the Italian one.