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Italexit is not a solution for Italy’s problems

Codogno, Lorenzo, Galli, Giampaolo, (2017), “Italexit is not a solution for Italy’s problems”, LSE EUROPP, 24 February

Beppe Grillo’s Five Star Movement riding high in the polls in Italy has led to speculation over the prospect of the country leaving the euro.Lorenzo Codogno and Giampaolo Galli argue that an ‘Italexit’ would be a catastrophic scenario, with incommensurable economic, social, and political costs lasting for many years. They note that redenomination, and a likely default on debt obligations, would not be a solution to the problem of a high public debt and would produce significant financial and economic instability. A far better and less costly solution would be to address Italy’s underlying problems, allowing the country to survive and thrive within the euro by enhancing potential growth and economic resilience.

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