ABSTRACT
It is often recognised – in economic policy and other areas of politics – that future gains require some degree of short-term pain. Economic theory has placed much importance in the last few years on how institutions affect economic outcomes. For example, fighting inflation implies some short-term output sacrifice. The long-term gain of greater efficiency and long-term growth implies the short-term effort to control budget deficits and lighten state presence in the economy, whilst also increasing the efficiency of that state presence. It seems hard, therefore, to expect these policies from countries with a very high turnover of governments. In taking difficult decisions there is always a temptation for parties to ‘opt-out’ of coalitions when a decision implies short-term unpopularity. In Italy’s case, it is not by chance that among the three biggest pieces of economic reform in the last five years (the massive 1993 budget, the July 1993 labour agreement and the 1995 pension reforms) were all approved by technocratic governments, where parties can hide behind the technocrat character of the Prime Minister and not take full responsibility for unpopular decisions.
