I keep seeing many argue that running a current account deficit is never a problem, under any circumstances. I respectfully disagree. At the very least, one should acknowledge that an open economy faces an intertemporal budget constraint.

In recent weeks, some political and academic commentators have celebrated the decline in the trade deficit and linked it to tariffs. However, the latest data — including today’s release — confirm the opposite narrative.

Do you like sports? Do you go to the stadium? Looking at the relative price of sporting events in Italy, it seems people love them — and that demand remains robust despite rising prices.

Italy’s December industrial production data (+3.2% y/y) is certainly positive. That said, a large gap remains with employment dynamics in the sector — one of the many pieces of the employment–output puzzle. The hope is that the gap closes from the bottom up.

The incredible evolution of Italy’s prime-age population. Have you ever heard it discussed? The peak was in 2009. The effects of the subsequent collapse (despite positive net migration) are often confused with Euro entry or the GFC. How could the Italian economy have grown?

The best line about AI I’ve read so far (and one that perfectly matches my own experience and what I hear around me): ‘AI makes the easy easier — and the hard harder.’ What’s your experience?

The exorbitant privilege, Swiss-style: CHF 4 billion distributed to the states (cantons), to be used to fund schools and other services. We shall defend it, we shall never run a deficit!

Demographics may be the most important factor for economic growth — yet the least discussed. Italy’s working-age population has been in steady decline for 35 years (net of the migration wave of the 2000s), unlike Spain’s, which continues to grow.

Spain’s aggregate GDP growth continues to be very strong, unlike Italy’s anemic performance. It shouldn’t be forgotten that the first — though certainly not the only — key difference is demographics, which have followed a completely different path over the past 10 years.

Over the past few days I’ve shown the evolution of various measures of real wages in Italy and Germany. The table below summarizes the statistics (1995–2019 and 1995–2024) for manufacturing and for all sectors. Note real hourly wages in Italian manufacturing between 1995 and 2019: +18.6%.

In Italy, you constantly hear that joining the Euro caused the stagnation of labor productivity in the periphery. But a simple comparison between Italy and Portugal tells a very different story. And beyond that, the blue line was already decelerating well before the Euro.

🇨🇭 Over the past 20 years, the number of self-employed among Swiss nationals has fallen sharply, a trend common to many countries. By contrast, self-employment has continued to rise among foreigners. What could explain this difference?

Over the past 20 years, the euro’s multilateral nominal exchange rate has, on average, appreciated — especially over the past five. But this nominal appreciation mostly reflects PPP. In real terms, the euro has in fact remained broadly stable.

During the pandemic, core inflation in Switzerland rose less than 2 percentage points vs 2019. In the same period, UK saw a 5-point increase. Why won't anyone learn from the best, and why keep ignoring the counterfactual evidence?

This has drawn a lot of attention: the recent rise in inactivity among young people (ages 15–39) in Italy. But caution is needed — how much of it simply reflects demographics? Fifteen-year-olds don’t have the same inactivity rate as 39-year-olds, and cohort sizes differ hugely.

Evidence that runs counter to the perception in Switzerland. Setting the number of jobs in each canton equal to 100 in 2000, Ticino now stands at 144. Only the Lake Geneva region has done better in terms of job creation.

Since 1970, Japan’s male employment rate has remained broadly stable. By contrast, the female employment rate has risen by about 25 percentage points (roughly 1 pp per year over the past 15 years) — an incredible performance that has gone almost unnoticed.

Over the past two months, ISTAT data show a decline in employment in Italy. Alternative seasonal-adjustment methods applied to the raw data, however, suggest a different picture, with employment slightly accelerating. The full analysis of the December report is archived on @KalistatData.

An Italian puzzle. How can we say that millions of workers switched from poorly paid, precarious jobs to more stable, better-paid ones, and at the same time claim that hourly productivity has fallen?

We call it PPP — absolute, in this case. One of the most stable macroeconomic relationships out there. And a good reason to keep the family savings in Swissies.

The Italian employment–output–(productivity) puzzle. Has Italy become more productive in recent years? Answer: it’s complicated! A 🧵 1/N

If you’re thrilled — as you should be — about Brett Matsumoto’s appointment as head of the BLS, you should be even more excited to read the Research Handbook of Inflation, since Brett co-authored Chapter 2. More information: www.e-elgar.com/shop/gbp/res...

New Italian employment and output data point to a fact that runs against the dominant narrative (in Italy and elsewhere): since 2019, output has grown more than employment, including in the latest quarter. Hard to believe, given Italy—but it’s time to talk about productivity.

A piece I co-authored with Luciano Capone on yesterday’s Italian data. The cyclical signal from the labor market and output remains positive, given the country’s fundamentals. Thanks, as always, to Il Foglio for the hospitality. Enjoy. www.ilfoglio.it/economia/202...

Unlike manufacturing, aggregate real compensation in Italy—both per hour worked and per employee—has shown a disappointing performance, driven by the services sector (though still positive for hours worked up to 2019).

Given what’s going on, a reminder to my American friends: you don’t need tariffs, nor a weak dollar. You simply need a fiscal rule. But I do wonder what the appetite for that is, on both sides of the political aisle and among the public. Greetings from Switzerland!

ISTAT has released the preliminary estimate of Italian GDP for Q4. Beyond the favorable quarterly figure, there is yet another upward level revision—unsurprising to those familiar with the employment–output puzzle. My comment on today’s data is archived on @kalistatdata.bsky.social.

This chart alone dismantles 20 years of anti-Euro propaganda. Growth in compensation per hour worked in manufacturing has been identical in Italy and Germany for 30 years. Is it a coincidence that the anti-Euro camp has never shown these data? Make sure they see it.

A provocative question. Based on the chart below, which country—Italy or the United States—joined the euro and thereby constrained manufacturing productivity growth, according to the dominant narrative?

Still on real hourly earnings. Extending the sample as far back as possible, the evidence remains unchanged: real hourly wages in Italian manufacturing have grown more than in the United States. This should not be confused with compensation per employee, which I will discuss soon.

A recent interview of mine with the @nytimes.com , where I discuss why I think some reforms are necessary at the Fed — and why, at the same time, I’m skeptical they can be implemented properly by the current administration. Thanks to @nytimes.com for reaching out. www.nytimes.com/2025/07/10/b...

Real wages in Italy haven’t grown for a long time. But manufacturing data tell a very different story. Between 2007 and 2020, real hourly wages in Italian manufacturing rose about 4–5 percentage points more than in the United States — the opposite of what people think.

In case you missed it: a reminder that taking data at face value—for policy or research—is risky. Understanding how statistics are constructed is crucial, yet something we unfortunately do not teach at university.

How is it possible that (almost) all the new jobs created in Italy over the past 12 months are held by people aged 65+? It’s quite striking, given that they should already be retired. That’s what the @istat_it data say — but reality is the opposite. 1/N

An interview of mine on the WSJ. Thank you to the WSJ for reaching out. Enjoy. www.wsj.com/economy/the-...

I had a talk with Bloomberg Asharq. Thanks for reaching out, always a pleasure connecting with BBA. Here is the video. Enjoy. now.asharq.com/clips/179406...

An article of mine published in Il Foglio (in Italian), in which I analyze the outcomes of the Trump administration’s tariff policy one year after its inauguration. Enjoy. www.ilfoglio.it/esteri/2026/...

Following Lutnick’s statements on the FT, my new article. Some of the things written by Lutnick are technically true but misleading; others are simply false. All true numbers and charts are in the article. Thanks, as usual, to Il Foglio for the hospitality. Enjoy. www.ilfoglio.it/economia/202...

According to ISTAT data, over the past 12 months (almost) all new employment in Italy has come from people aged 65+. An article of mine in which I explain why the truth behind the data is the opposite of what it appears. Thanks to Il Foglio for the hospitality.Enjoy. www.ilfoglio.it/economia/202...