Sky is (not) the limit: the history of Italian public debt

At more than 130% of GDP at the end of 2016 Italian sovereign debt is the third highest among OECD countries. This is not a new situation for Italy: for large part of its history as a unified country, it has experienced a high level of public indebtedness. The aim of this work is the analysis of the Italian public debt stock over the course of more than one hundred and fifty years, from 1861 up to 2015. In order to do so, a review of the current definitions and relevant economic theory on the topic is performed, along with a brief historical digression on the origin of public borrowing. The work will then analyse the overall debt dynamic, looking at the evolution of the debt stock both quantitative and qualitative. The focus will then move on specific period of the Italian history, which can be associated with relevant episode of debt build-up or reduction; the analysis will assess the role played by all the variables affecting the debt dynamic, trying to identify the main driver behind the debt to GDP ratio behaviour. Starting from the 1990s, sovereign bonds interest rate as determined on the financial markets are analysed, in order to understand the magnitude and speed with which they influence public debt cost.