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The Eurozone Crisis and the Acceleration of Decline (I)
•Lecture 6: The Eurozone crisis and the acceleration of decline (I)

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The 2008 Financial Crisis: Global Context
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•Origins in the US subprime mortgage crisis
•Collapse of Lehman Brothers (September 2008)
•Rapid spread to European financial markets

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Initial Impact on Italy
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•Contraction of GDP (-1.1% in 2008, -5.5% in 2009)
•Rise in unemployment (from 6.7% in 2008 to 7.7% in 2009)
•Decline in industrial production and exports

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Italy's Vulnerabilities
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•High public debt (over 100% of GDP)
•Low productivity growth
•Fragile banking sector
•North-South economic divide

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The Sovereign Debt Crisis
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•Greek crisis (2009-2010)
•Contagion to other Southern European countries
•Rise in Italian government bond yields
•Risk of default and speculative attacks

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EU and ECB Responses
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•European Financial Stability Facility (EFSF)
•European Stability Mechanism (ESM)
•ECB's Long Term Refinancing Operations (LTROs)
•Mario Draghi's "whatever it takes" speech (2012)

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Austerity Measures in Italy
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•Berlusconi government's initial response (2008-2011)
•Monti's technocratic government (2011-2013)
•Fiscal consolidation and spending cuts
•Labor market and pension reforms

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Economic Consequences of Austerity
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•Prolonged recession (2012-2013)
•Further increase in unemployment (12.1% in 2013)
•Decline in domestic demand
•Widening social inequalities

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Impact on Italian Industries
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•Closure of many small and medium enterprises
•Decline in traditional manufacturing sectors
•Reduced competitiveness in global markets
•Brain drain and loss of human capital

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Political Consequences
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•Fall of Berlusconi government (2011)
•Rise of anti-establishment sentiments
•Growing Euroscepticism
•Erosion of trust in traditional political parties

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Long-term Economic Effects
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•Stagnant GDP growth
•Persistent high unemployment, especially youth unemployment
•Increased poverty rates
•Widening gap with Northern European economies

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Debate on Austerity vs. Growth
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•Criticism of austerity-focused policies
•Calls for more growth-oriented measures
•Tensions between Italy and EU over budget flexibility
•Discussions on structural reforms vs. fiscal stimulus