A macroeconomic assessment of the Italian Recovery and Resilience Plan from administrative data

This paper presents an ex-ante assessment of the macroeconomic and distributional impact of the Italian Recovery and Resilience Plan (RRP). We use a large-scale dynamic stochastic general equilibrium model adapted to capture the effects of the RRP-financed expenditures. The original Plan is mapped onto the model using granular information sourced from the Italian Ministry of Economy and Finance. The results suggest a sizable impact on key macroeconomic variables mainly driven by investments. The impact on the functional distribution of income is initially adverse for profits, which decline in the initial stages due to augmented labor and capital demand. However, profits suddenly move above their initial level after GDP increases. Overall, the selection and design of the public-investment programs emerge as a crucial determinant of the Plan’s success.