KEYNES IN ITALIAN ECONOMETRIC MODELS DURING THE SEVENTIES. THE EXPERIENCE OF PROMETEIA AND CONFINDUSTRIA

The aim of this paper is to highlight the intellectual influence of Keynes in the building of Italian econometrics and how our scholars tried to find a way out from the stagflation occurred in Italy during the Seventies. We have chosen two case studies: the model designed by PROMETEIA, the think tank belonging to the University of Bologna, and DYANMOD, the main model of Confindustria (Confederation of Italian Industries). Although the Keynesian thought crucially influenced their structure and functioning, they managed to explain also the oil-shock-induced supply side effects, showing an unexpected degree of innovation within Keynesian thought. Furthermore, these models were conceived to join the larger Project LINK by Lawrence Klein, in order to connect the economies of many OECD countries. Given our microeconomic foundations, the main conclusions traced by these models were the focus on balance of payments equilibrium, capital accumulation and public finance constraints, thus asking for economic policies that could guarantee growth and disinflation.