The Multisectoral Dynamic Model of IRI: A Policy Simulation¹

Article type: Research Article

Authors: Mandarino, Nicola^a

Affiliations: [a] Via Giovanni Pittaluga 15, 00159 Rome, Italy

Note: [1] University of Rome and M&DR Consultants.

Abstract: IRI (“Istituto per la Ricostruzione lndustriale”) is the largest mixed-state enterprise of Italy: because of its size and scope, the question has often arisen on how IRI's policy decisions are influenced and in turn influence the Italian economy. This paper attempts to indicate a method for the evaluation of this interrelationship via input-output techniques. A dynamic input-output model partitioned between IRI and the Rest Of the Country has been built in order to endogenize investments, such a crucial factor in corporate strategies. Moreover, the I/O framework has been used to analyze the effects of corporate shifts in the sectoral portfolio diversification, where acquisition and selling policies can substantially modify the production structure of a large company. The policy exercise presented here builds on the compilation of an extensive database, mainly focused on evaluating sectoral capital stocks from establishment data. The results of the model are discussed to envisage how 1991–95 IRI's sectoral investments and production plans will be affected by the macroeconomic scenarios. On the other hand, since IRI plans are adjusted annually, an application of the proposed methodology may point out to policy-makers which changes are needed in investment outlays in order to achieve economic targets.

DOI: 10.3233/JEM-1993-19102

Journal: Journal of Economic and Social Measurement, vol. 19, no. 1, pp. 21-35, 1993