The Italian nominal interest rate conundrum: A problem of growth or public finance?

The economic literature presents a large heterogeneity of results concerning the impact fiscal variables on interest rates. Focusing Italian economy and considering nature our rate determinants (public finance nominal GDP growth), we decided to undertake cointegration analysis relying Autoregressive Distributed Lag (ARDL) bound test approach, particularly suitable procedure within this framework that is able disentangle short-run long-run dynamics. Our are quite controversial, shedding new light role gross debt primary balance as share in relation long-term rate. In context, ECB has probably played crucial role, especially most severe phases Sovereign crisis. European then shows further critical issues play econometric analysis.