Italy's Payments Crisis: International Responsibilities

Abstract

W ITHIN a decade, the Italian balance of payments has experienced a large deficit, a prolonged surplus, and a new and larger deficit. In 1963-64 and again in 1973-74, the Italian monetary autho-rities used the international credit market to balance the Italian external accounts in the short run. In both instances, foreign newspapers were full of Italy's chaos and impending doom. In what follows, I do no more than attempt to put a decade of Italian balance-of-payments swings into its necessary international economic relations perspective; my point of departure, very firmly, is that in international economic relations the tail cannot wag the dog.