Italy; Selected Issues

The Selected Issues paper is focused on policies to secure strong growth and safeguard fiscal sustainability. The paper analyzes the reasons behind Italy's persistent inflation differential vis-a-vis the euro area. It reviews Italy's large regional imbalances through a catch-up in income levels and estimates a growth model using panel data for Italian regions to determine the impact of a number of factors in addition to convergence forces. It also focuses on fiscal sustainability and reviews the case for additional pension reform steps in Italy.