Sorry about radio silence — real life intruded. Also, working on longer-term projects; including one that had me looking at a pretty big puzzle that isn’t getting much attention, namely, what is going on with Italy.

Italy is often grouped with Greece, Spain, etc. in discussions of the euro crisis. Yet its story is quite different. There were no massive capital inflows; debt is high, but deficits aren’t. The most striking thing about Italy is a remarkably dismal productivity performance since the mid to late 1990s. Here’s a comparison of Italian with French productivity, as measured by output per worjer, from the Total Economy Database:

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I’ve been reading many attempts to explain what happened; while there’s a lot of interesting stuff about everything from regulation to firm size to export mix, I really don’t see anything that feels like a slam dunk.

And no, it’s not just a too-big welfare state — France’s welfare state is even bigger.

I’m not going to answer this; truly, I don’t know. But it’s important.