Alberto Alesina, who died prematurely at the age of just 63, was the best known and most cited Italian economist abroad. For over thirty years now, he has taught at Harvard, praised in the academic field for his creativity, as well as for the intelligence with which he applied his tools of analysis to social and political problems. He was also esteemed by his numerous opponents.
A controversy is considered initiated by him that still fascinates economists around the world, that on the hypothesis of “expansive austerity”: that is that in a country in difficulty a strong and concentrated spending cut can, contrary to common sense, revive the economy. But, as often happens, the controversy on both sides has gone beyond the original cue.
In the 2009 work written together with her colleague Silvia Ardagna, Alesina sought to demonstrate that to revive the economy, reducing taxes or cutting expenses is more useful than increasing government intervention; and that it is better for a state in difficulty because of deficits and debt to reduce expenses than to increase taxes.
The numbers of Alesina and Ardagna were soon technically contradicted by studies by the International Monetary Fund, conducted by another well-known Harvard economist, the French Olivier Blanchard, and also by Carlo Cottarelli. But by now the public debate had already schematized and radicalized in opposing theses: “austerity is good” as opposed to “austerity is very bad”.
It was necessary to invoke Alesina, even beyond the original contents, to those who wanted to impose rapid debt repayment plans, for example to Greece. As you know, the results have been bad. Only in a few restricted cases of countries highly dependent on foreign capital, very open to trade, with strong mobility of the workforce, can the austere thesis boast results.
Responding to criticism, Alesina then expanded and argued on her studies in a book written together with Francesco Giavazzi and Carlo Favero (Austerity, when it works and when not, Rizzoli 2019). In his presentation in Rome, the governor of the Bank of Italy Ignazio Visco spoke as a friendly contradictor.
But much more had been done by Alesina. One of the most interesting studies of recent years concerned how immigration affects people’s ideas about inequalities and welfare interventions. It also showed how hostility to immigrants feeds on a gross overestimation of their numbers and needs.