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This article describes Michael Lewis's book, The Undoing Project: A Friendship That Changed Our Minds, published in 2016, which is a nice introduction to behavioural economics for the non-technical reader. Daniel Kahneman, who won the Nobel Prize for Economics in 2002, and Amos Tversky (1937 – 1996) are the founders of behavioural economics: their work persuaded the young Richard Thaler, who received the Nobel Prize in 2017, to adopt the same line of research. Lewis has written a fine book on the intellectual adventures of Kahneman and Tversky, examining their early studies, the prevailing views on rationality in economics prior to their research, their innovative contributions, their friendship, and what came after behavioural economics.

Italian Abstract: Il lavoro analizza per la prima volta il corpus linguistico delle Considerazioni finali (CF di seguito). La prima parte riassume le caratteristiche del data-set, costituito da circa 850.000 parole. La seconda parte esamina i temi affrontati dai Governatori in settanta anni di storia italiana. La terza sezione contiene un’analisi linguistica delle CF, soffermandosi sull’uso di alcuni tipi di proposizioni subordinate: causali, consecutive, finali, concessive e condizionali. I temi illustrati nelle CF hanno risentito degli eventi succedutisi, ma anche delle visioni di ogni Governatore. La lunghezza dei testi ha raggiunto i massimi negli anni Settanta, per poi diminuire. La lunghezza delle frasi e cresciuta negli anni Cinquanta; e poi scesa. Il numero totale dei cinque tipi di subordinate ha raggiunto i valori massimi con Menichella; il numero e poi diminuito. In Fazio, Draghi e Visco prevalgono le proposizioni subordinate finali, che indicano un’intenzionalita, una finalizzazione dell’agire. Mentre i primi Governatori, fino agli anni Settanta, privilegiavano un’impostazione rivolta soprattutto a tracciare un rendiconto dell’andamento dell’economia, gli ultimi venticinque anni, con l’aumento delle subordinate finali, rivelano un mutamento del punto di vista: ci si orienta verso la formulazione di un programma di azioni per l’economia italiana. English Abstract: This paper is the first to construct and analyse the language corpus of the Concluding Remarks (CF from now on), using the texts from 1946 to 2018. The first part of the paper summarizes the characteristics of the dataset, which contains around 850,000 words. The second part analyses the topics addressed by the Bank’s Governors over seventy years of Italian economic history. The third section provides a linguistic analysis of the CF, focusing in particular on the use of some types of subordinate clauses. The topics covered in the CF have been influenced by events, but also by each Governor’s personal point of view. The CF reached their maximum length in the 1970s and then became shorter. The length of the sentences increased in the 1950s and then declined, with the shortest sentences dating to the end of the 1990s. Our linguistic analysis shows that, up until the time of Baffi, the Governors concentrated on presenting economic trends. Over the last 25 years, however, the CF have focused on drawing up action programmes for Italy’s economy.

This paper estimates a consumption function for Italy. In addition to permanent income, housing wealth, the interest rate on household loans and an index of credit conditions, our model introduces household net worth split into liquid and illiquid assets. The consumption dynamics are examined by using financial accounts and real national accounts in a Vector Error Correction Model (VECM), estimated from 1975 to 2017. The results show that the marginal propensity to consume out of liquid financial assets – mainly deposits and bonds – is positive and statistically significant, and greater than that for illiquid assets (mainly unquoted shares and insurance and pension assets); we also find that housing wealth has a smaller and significant impact on consumption. As expected, permanent income accounts for a large fraction of consumption, while the effect of the interest rate is negative.

This work provides a comprehensive overview of the giant leap made by European central bank statistics over the last quarter century. We illustrate, first, the work that led to a brand-new set of central bank statistics for the implementation of the common monetary policy in the euro area and the underlying rationales. We then focus on the most significant developments brought up by the global financial crisis and by the institutional changes that accompanied it. The final part looks at challenges lying ahead for official statistics, namely, how to deal with digitalization and globalization, and how to obtain better data on income and wealth distribution., PSL Quarterly Review, Vol. 74 No. 299 (2021): December

Italian Abstract: Il lavoro analizza i risultati dell’Indagine sull’Alfabetizzazione e le Competenze Finanziarie degli Italiani (IACOFI), condotta dalla Banca d’Italia all’inizio del 2020 seguendo la metodologia OCSE-INFE che definisce l’indicatore di competenze finanziarie come la somma dei punteggi calcolati per tre aspetti: le conoscenze, i comportamenti e le attitudini. L’indagine conferma la posizione di ritardo dell’Italia nel confronto internazionale, gia rilevata nel 2017, ma mostra un miglioramento nelle conoscenze degli italiani e una sostanziale stabilita nei comportamenti e nelle attitudini. L’alfabetizzazione differisce nella popolazione a seconda del livello di istruzione – la variabile piu rilevante – del genere, dell’eta e della localizzazione geografica degli intervistati. Un esercizio econometrico focalizzato sulle conoscenze – l’indicatore piu significativo – mostra che gli italiani possono essere suddivisi in quattro gruppi, caratterizzati da livelli crescenti di conoscenze finanziarie: gli esclusi, gli incompetenti, i competenti e gli esperti. Le nostre stime consentono di approfondire, per gruppi di intervistati, le cause del miglioramento delle conoscenze registrato tra il 2017 e il 2020: le popolazioni degli esclusi e degli incompetenti sono diminuite, a fronte di un aumento dei competenti, e, in piccola misura, degli esperti. English Abstract: The paper analyses the results of the Survey on the Financial Literacy of Italian Adults, conducted by the Bank of Italy in early 2020. In line with the OECD’s methodology, the financial literacy indicator is the sum of the scores calculated for three factors: knowledge, behaviour and attitudes. The survey confirms that Italy lags behind by international standards, as already noted in the 2017 survey. Compared with 2017, the new survey shows that Italian people’s financial knowledge has improved, while their behaviour and attitudes have essentially remained stable. Financial literacy varies among the population according to the education levels – the most significant variable – gender, age and geographical location of those interviewed. An econometric analysis focused on knowledge – the most reliable component – shows that Italians can be divided into four groups, characterized by increasingly high levels of financial knowledge: excluded, incompetent, competent and expert. Between 2017 and 2020, the number of excluded and incompetent individuals in the population has decreased, whereas that of competent, and to a lesser extent, of expert individuals has increased.

In many countries, household debt increased from the 1990s until the global financial crisis of 2007–2008 and then stagnated with the Great Recession, the euro-area sovereign debt crisis and deleveraging. In spite of these common trends, differences in national household debt/disposable income ratios are evident. This paper studies the determinants of household debt using a dataset of 33 countries and taking into account both demand-side and supply-side factors. The econometric exercises, covering the period 1995–2016, yield the following results. First, there is a positive link between household debt and both household wealth and house price growth. Second, the quality of bankruptcy laws relates positively to household debt, whereas longer insolvency resolution times are associated with lower household debt. Third, Anglo-Saxon legal origin and Scandinavian legal origin have a stronger link with household debt than French and German legal origin. Fourth, household debt is higher in countries with social-democratic and liberal welfare models than in conservative and Eastern European welfare states. Fifth, the ratio of public debt to GDP displays a negative association with private debt. Last, the effect of saving on household debt is significant only in the years of household deleveraging, i.e. after the global financial crisis. While the effect of demand-side variables is unstable over time, supply-side variables appear to be more persistent in determining the level of household debt.

According to macroeconomic predictions firms are expected to be net borrowers: the net change of their financial assets should be smaller than the net change of their financial liabilities. However, since the mid-1990s, the non-financial sector has been on average a net lender in countries such as Japan, the UK, Germany and the Netherlands. Conversely firms remained on average net borrowers in countries such as France, Italy and the US. Using financial accounts, we investigate the sources of corporate sector surpluses and deficits applying panel data techniques. Our statistics include 18 industrial countries over the period 1995–2014. We find that firms’ surpluses are structurally linked to net foreign direct investments. The econometric results are robust to the use of variables that control for the business cycle, such as the output gap, the ratio of corporate investment to GDP, firms’ profits and leverage, and taxation.

This paper uses a unique data set – comprising 125 years of individual bank balance sheets – to investigate the effect of regulatory changes on the evolution of bank competition in Italy. The historical depth of this data set makes it possible to assess the impact of infrequent regulatory reforms that drastically changed the banking sector in the 1930s and in the 1980s. We compare several indicators to analyze how bank competition evolves, and we find that its evolution exhibits a yo-yo pattern induced by the changes in regulatory regimes.

Italian Abstract: Il lavoro analizza l’evoluzione della ricchezza delle famiglie in una prospettiva di lungo periodo, confrontando i cambiamenti del portafoglio finanziario e delle attivita non finanziarie in Italia con le dinamiche di altre economie avanzate. In Italia la ricchezza reale e 5,5 volte il reddito disponibile, con le abitazioni che contano per 4,6 volte; la ricchezza finanziaria e 3,8 volte il reddito disponibile. La ricchezza totale lorda e quindi circa 9,3 volte il reddito disponibile. Tenendo conto delle passivita, pari all’80 per cento del reddito disponibile, la ricchezza totale netta delle famiglie e 8,5 volte il reddito. Anche in Francia e Spagna la ricchezza reale delle famiglie e prevalente rispetto a quella finanziaria, mentre il contrario si osserva negli Stati Uniti e in Germania. In Italia, le attivita finanziarie sono, in rapporto al reddito disponibile, in linea con la Francia, piu alte che in Spagna e Germania, inferiori rispetto a Stati Uniti, Giappone, Regno Unito e Canada. Nella gran parte dei paesi, ad eccezione di Germania e Giappone, dal 1995 a oggi le variazioni delle attivita finanziarie sono derivate in maggior misura da variazioni dei prezzi degli strumenti – guadagni o perdite in conto capitale – piuttosto che da flussi di risparmio. Negli ultimi venti anni il portafoglio finanziario delle famiglie italiane e diventato piu simile a quello medio dei paesi avanzati. Nel confronto con gli altri paesi, il debito delle famiglie italiane rimane il piu basso. English Abstract: The paper studies the long-term evolution of household wealth in order to compare the changes in Italian financial wealth and real wealth with those of the most advanced countries. In Italy households’ real wealth is 5.5 times disposable income, while housing wealth is 4.6 times, and financial wealth is 3.8 times disposable income. Therefore total gross wealth is around 9.3 times disposable income. Given that household liabilities make up 80 per cent of disposable income, total net wealth is 8.5 times income. In France and Spain household non-financial wealth also exceeds that of financial assets, while the contrary holds in the United States and in Germany. In Italy the ratio of gross financial wealth to disposable income is in line with that in France, greater than in Spain and Germany, and smaller than in the USA, Japan, the UK, and Canada. With the exception of Germany and Japan, changes in financial assets are mainly due to price changes in financial instruments – holding gains or losses – rather than to financial transactions. In the last two decades the financial portfolio of Italian households has become more similar to the average portfolio of the advanced economies. Italian household debt is the lowest by international comparison.

We test whether the length of a firm–bank relationship affects firms’ foreign direct investment (FDI) and/or exports and if this nexus depends on the main bank itself being internationalized. The analysis is carried out on matched micro-data from a large survey of Italian manufacturing enterprises from 1998 to 2003. Our main result is that a longer relationship with the main bank fosters firms’ FDI but does not affect exports. Moreover, when the main bank has subsidiaries abroad this result is strengthened for FDI and there is even a weak positive effect of the duration of the firm–bank relationship on exports.

This chapter takes the perspective of users of the macro framework of financial accounts and balance sheets. Different frequencies, quarterly versus annually, may be more or less appropriate depending on the questions raised by these users. Thus, portfolio shifts may be better captured through quarterly financial accounts and balance sheets, whereas annual data may provide more accurate information for structural types of analysis. The interest in financial accounts and balance sheets is also a function of specific events and times. Undoubtedly, the 2007-09 economic and financial crisis has increased the demand for financial accounts and balance sheets, both from a general macroeconomic point of view, and from the perspective of financial stability analysis and monetary policy. This chapter highlights the latter use of financial accounts and balance sheets for policy purposes, and also discusses the use of financial statistics by famous economists, from the early 1950s to today.

According to macroeconomic predictions firms are expected to be net borrowers: the net change of their financial assets should be smaller than the net change of their financial liabilities. However, since the mid-1990s, the non–financial sector has been on average a net lender in countries such as Japan, the UK, Germany and the Netherlands. Conversely firms remained on average net borrowers in countries such as France, Italy and the US. Using financial accounts, we investigate the sources of corporate sector surpluses and deficits applying panel data techniques. Our statistics include 18 industrial countries over the period 1995-2014. We find that firms’ surpluses are structurally linked to net foreign direct investments. The econometric results are robust to the use of variables that control for the business cycle, such as the output gap, the ratio of corporate investment to GDP, firms’ profits and leverage, and taxation.

This paper analyses 43 countries from 1970 to 2010 to investigate the effect that public debt has on bank loans. The study is motivated by the need to understand the consequences of high public debt, a condition many countries are already experiencing or will experience in the next few years. Looking at the 40-year period, we find that the ratio of government debt to GDP has a negative association with the subsequent growth of bank credit. Our results hold using different econometric methods and controlling for variables such as the lagged value of bank loans, the occurrence of banking crises, per capita GDP, the inflation rate, trade openness, international investment position, stock market capitalization and countries' legal origin.

Italian Abstract: Il lavoro ricostruisce le serie storiche annuali degli aggregati monetari italiani. Rispetto a contributi precedenti, dedicati a periodi circoscritti dell’economia italiana, il lavoro copre l’intervallo 1861-2014; migliora la qualita di serie storiche del passato e fornisce dettagli maggiori sulle componenti degli aggregati. Il lavoro riporta le fonti utilizzate e la metodologia seguita; discute le tendenze principali degli aggregati dal 1861 a oggi; presenta un’analisi econometrica della domanda di moneta.English Abstract: The paper builds annual time series of Italian monetary aggregates. While previous contributions focused on certain periods in Italy’s economic history, our work covers the years 1861-2014 uninterruptedly; we improve the quality of the existing time series and provide further details on the components of aggregates. The paper also documents the sources and methods used for the estimates. Finally, we discuss the key trends of the aggregates since 1861 and present an econometric analysis of money demand.

This work rehearses the main themes of Piketty’s book and summarizes the debate it triggered. The paper dwells on the rise in the ratio of household wealth to GDP in the rich countries since the 1980s and the role played by the build-up of saving and variations in house and financial asset prices; on the various justifications put forward for the increasing income and wealth inequality that has accompanied the rise in the wealth/income ratio, especially in the US and Britain; on the relationship between the rate of return on capital and the economic growth rate; on the ties between rising income inequality and the financial crisis of 2007-08; on the feasibility of Piketty’s proposals for higher taxation of top incomes and a progressive global tax on net household wealth; and on the progress that has been made in the US and Europe in exchanging information on citizens’ income and foreign assets.

The objective of this paper is to study the issue of convergence of financial systems through the lens of asset allocation. It examines β- and σ-convergence of the most important financial instruments: deposits, debt securities, shares and insurance products. The analysis is conducted on two panels of OECD countries, using data gathered from the flow of funds and from the Financial Development and Structure Database ( Beck et al., 2009 ). In both data sets, strong evidence supports the existence of β-convergence of shares and insurance products, confirming an increasing importance of capital markets all over the developed world. In contrast, mixed results are obtained for debt securities and deposits due to differences across countries in the weight of national public debts and in the role of banks.

This paper compares alternative econometric packages for the estimation of panel data. Concern has recently been expressed in the literature about the lack of attention paid to numerical accuracy in econometric software. We compare the numerical values of the estimates of three of the most popular econometric packages featuring built-in panel data estimation algorithms: LIMDEP, STATA and TSP. The empirical application consists in looking at the determinants of bank interest rates on deposits in Italy using a data set with more than 10,000 observations. Different specifications have been estimated using fixed- and random-effects models. Fixed- effects estimates are equal in the three packages. By contrast, small differences appear for the random-effects estimators. We discuss the reasons for which the estimators differ and compare the relative efficiency of the random-effects algorithms provided by the three packages using a set of suitably designed Monte Carlo simulations. Over the last two decades many software packages have been developed featuring complex estimation procedures that do not require users to have in-depth knowledge of the numerical algorithms or computer science. Most of the econometric and statistical software packages available to the academic and business communities feature both interactive and programmable interfaces. The users of these packages may be unaware of the risk of numerical inaccuracy. The purpose of this paper is to respond to the caveats about numerical accuracy in econometric software raised in McCullough and Vinod [25], who are concerned about the lack of attention paid to numerical precision in the selection of econometric packages. The fear is that the market might place Central Processing Unit (CPU) performance above accuracy. We accordingly decided to compare the numerical precision of some popular econometric software packages by estimating panel data and looking at the estimators’ characteristics with fixed-effects and random-effects models.

The goal of this paper is to investigate the link between the length of a firm-bank relationship and firm's internationalization. The analysis is carried out on matched firm-bank micro-data from a survey of Italian enterprises from 1998 to 2003. We obtain two main results. First, a longer relationship with the main bank fosters firms' foreign direct investment (FDI) while it does not affect the export status of the enterprises not engaging in FDI. Second, the probability of a firm undertaking FDI further increases if its main bank is itself internationalized by holding foreign subsidiaries.

In most countries household debt increased from the 1990s until the crisis of 2007-2008 before stabilizing due to recession and deleveraging. However, there are national differences in household debt/GDP ratios. This paper studies the determinants of household debt, using a 32-country dataset and taking both demand-side and supply-side factors into account. The econometric exercises, covering the period 1995-2011, yield two main results. First, debt is greater in countries with higher per capita GDP and household wealth. Second, the efficacy of bankruptcy laws is correlated with the level of household debt, while a longer time to resolve insolvencies is associated with lower debt. These two institutional variables are linked to household debt more robustly than is the quality of credit registers.

The multimarket contact hypothesis holds that more contacts between firms competing in the same markets may induce more collusion. This paper tests the hypothesis for the Italian banking market, analysing the behaviour of the largest Italian banks from 1990 to 1996. Market rivalry is gauged by changes in loan market shares and interest rates in each Italian province. We estimate the effects of increasing multimarket contacts, concentration indicators, banks' costs and loan demand on variations in market shares and interest rates. No support is found for the multimarket contact hypothesis. Geographical overlap in banking is positively correlated with changes in market shares, confirming the thesis of an overall increase in competition within the Italian banking system. Greater multimarket links also seem to correspond to lower lending rates. (J.E.L.:G21, C33, L40.)

This paper examines the developments of the Italian banking system during the Nineties from two related points of view: net external position and degree of internationalisation, i.e. branches and subsidiaries abroad. These themes seem particularly interesting in the light of the widespread belief that the euro area will significantly increase banking competition and cross-border operations in coming years. We find two major forces driving banks' external net position: the growth in loans to domestic borrowers and the convergence in interest rate levels across European countries. The development of foreign branches and subsidiaries has been influenced by two counterbalancing forces; the big banking groups reduced their presence abroad while some medium-sized banks opened their first branches; the focus of foreign branches and subsidiaries has been on specific segments of banking activities, very often exploiting "localization" advantages. Despite the improvement in the Nineties, Italian banks have tended to show a relatively low degree of internationalisation compared with the main European banking system.

This article proposes a framework to quantify the magnitude of monetary stimulus offered during a recession. We estimate that, over the past 30 years, the Federal Open Market Committee (FOMC) offered larger incentives and for a longer duration during a recession than in the past cycle. Furthermore, each recession drained the FOMC’s resources and left the Committee with ‘less ammunition’ to fight the next recession. Therefore, our work suggests that monetary policy is aging. To de-age monetary policy, we propose 4% as a long-term target for the nominal FFR. Some of the major benefits of our proposed framework include: helping market participants gauge magnitude of accommodation; anchoring market participants’ expectations; reduce time spent at the zero lower bound; lessen dependence on balance sheet expansion; ensure that the real federal funds target rate will be positive when the FOMC meets its interest rate and inflation targets.

The real estate sector is of particular interest from a central bank's perspective; due to its size, it directly and indirectly affects economic developments, financial stability and the monetary policy stance. The volume collects the papers by economists of the Bank of Italy and the discussions by external experts which were presented at the workshop "Trends in the housing market: Italy and the international comparison", held in Rome at the Bank of Italy on 20 November 2012. The various contributions are organised in three sections, which respectively deal with the cyclical pattern of the real estate market in Italy, its structural characteristics and the international comparison.

This paper analyses aggregate household wealth in Canada, France, Germany, Italy, Japan, Spain, the UK and the US. Building on a new data set for the time span 1980-2011, we discuss the trends in household financial assets in the last thirty years, the reasons for differences across countries, the tendency towards convergence, the economic interpretation of breaks in time series and the effects of the recent financial crisis. We also comment on the evolution of household debt and real assets. In discussing the empirical evidence, the paper summarises some of the recent literature on household wealth.

This paper analyses aggregate household wealth in Canada, France, Germany, Italy, Japan, Spain, the UK and the US. Building on a new data set for the time span 1980-2011, we discuss the trends in household financial assets in the last thirty years, the reasons for differences across countries, the tendency towards convergence, the economic interpretation of breaks in time series and the effects of the recent financial crisis. We also comment on the evolution of household debt and real assets. In discussing the empirical evidence, the paper summarises some of the recent literature on household wealth.

This paper summarizes the results attained by the Eurosystem in harmonizing the statistics used for the conduct of monetary policy. Since the creation of the euro area, in January 1999, significant progress has been made in the harmonization of data on banks’ balance sheets, central banks and money market funds; on interest rates on deposits and loans; on non-bank financial intermediaries, especially mutual funds and financial vehicle corporations engaged in securitization; and on financial accounts. The paper also outlines the debate on statistical information gaps that came to the fore after the 2007-08 financial crisis.

Building on a new dataset on Italian banks and other financial institutions from 1861 to 2011, the novelty of this paper is to examine the patterns of the main items of bank's balance sheets, such as deposits, capital and reserves, bonds issued, bonds held in portfolio, and loans for a period of 150 years. The long time behaviour of credit maturity, postal savings, State ownership of banks, and bank interest rates is also studied.

Government intervention in credit markets has been criticized as potentially conducive to distortions in the behaviour of both banks and firms. We argue that credit subsidies may lead to a decline in the level of screening performed by banks. This effect was at work in Italy in the early 1990s when subsidized lending was still important and several intermediaries experienced a deterioration in their loan portfolios. The novelty of the paper is to show that the share of government subsidized credit on a bank's loan portfolio contributes to explaining the overall credit risk of the intermediary.

The paper compares the essential features of the Italian banking system with those of the other large euro-area countries. The analysis focuses on banks’ size, ownership and competitiveness, their role in financing firms, the composition of their balance sheets and their degree of internationalization, profitability and terms for customers. Within this overall framework the paper examines the banking system’s response to the financial crisis of 2007-09 and subsequent developments. The progress made in decades past is recalled and further necessary steps set out.

Questo lavoro ricostruisce serie storiche delle banche, degli istituti di emissione, della Cassa Depositi e Prestiti e degli intermediari non bancari dal 1861 al 2011. Le statistiche si riferiscono alle principali voci dei bilanci bancari, alla circolazione monetaria, alla raccolta postale, ai tassi di interesse delle banche, al valore aggiunto. L’articolo discute le tendenze di fondo del sistema bancario e delle altre societa finanziarie nei 150 anni dell’Unita d’Italia.This paper reconstructs time series for Italy's banks, banks of issue, Cassa Depositi e Prestiti S.p.A. and non-bank financial intermediaries from 1861 to 2011. Statistics refer to the main items of bank balance sheets, currency in circulation, postal saving, bank interest rates, and value added. The paper analyses the main trends of the banking system and other financial corporations since Italian unification.

In this paper we present new estimates of the effect of household financial and real wealth on consumption. The analysis refers to eleven OECD countries and takes into account the years from 1997 to 2008. Unlike most of the previous literature, we exploit European quarterly harmonized data on household financial assets and liabilities, which have been taken from the flow of funds. We measure not only the effect of total financial wealth on consumption, but we also consider the impact of a subset of those financial assets (i.e., quoted shares, mutual funds, insurance technical reserves) that are more linked to the Stock Exchange. Furthermore, we implement a recent econometric approach that allows for more flexible assumptions in the non-stationary panel framework under consideration. Our main results show that both net financial and real wealth have a positive effect on consumption. Overall, the influence of net financial assets is stronger than that of real assets. Using quoted shares, mutual funds and insurance technical reserves as a measure of financial wealth, we obtain a lower estimate of the marginal propensity to consume, possibly due to the strong concentration of equity instruments in the richest households.

For good or for bad, finance has a pervasive role in modern economies. Understanding the functioning and evolution of financial markets and intermediaries and their interconnections with the real world is an old theme in economics, but one that needs continuous updating to keep pace with financial innovation on one side and the development of new statistical tools for their analysis on the other. This introductory chapter gives an overview of how interest in understanding the financial aspects of the economy has fluctuated considerably in the past, before reaching centre-stage in recent years. It also argues that the clarity of the macroeconomic picture of a country’s financial structure offered by its financial accounts is difficult to match, and it illustrates the thread connecting the essays included in the rest of the book. The key message is that financial accounts can be a powerful tool for understanding the structure and the weaknesses of financial systems.

The paper analyses the birth of financial accounts in the US and in Italy. We start by looking at Morris A. Copeland, the first scholar who rationalized the account framework. We debate the intellectual environment that influenced Copeland’s work, namely the building of national accounting and the discussion on business cycle measurement. We summarize the Federal Reserve’s intervention that led to the regular presentation of the flow of funds in the 1950s. We then explore the multiple intellectual sources of the “Italian way” to financial accounts, underlining the role of Paolo Baffi, chief economist of the Bank of Italy in the 1950s. The Italian case epitomizes the idea that statistics are not neutral: in their conception and design they reflect the needs of the institutions which implement them. Multiple examples are given of how the rhetorical needs of the Italian central bank shaped the definition of the building blocks of the financial accounts and their presentation. We conclude by describing the later interaction between the evolution of macroeconomic theory and the rise of financial accounts in the 1960s and 1970s, a loss of interest in these statistics in the 1980s and 1990s, and its revival in recent years, mostly influenced by the financial crisis.

This paper provides a comparative analysis of household wealth in the United States, the United Kingdom, Japan, France, Germany, Spain, and Italy. We start by comparing national levels and composition of financial wealth, looking at the instruments in which households invest: deposits, securities other than shares, shares and other equity, mutual funds, pension funds, and insurance products. We then discuss the empirical evidence on household indebtedness and real assets across countries, providing a summary of the situation with regard to total household wealth (i.e. net financial assets plus real assets). The analysis of aggregate wealth is accompanied by an examination of micro data on household asset participation and the distribution of household net worth. Finally, we study some correlations and run an econometric exercise on the links between household wealth and selected economic indicators, with particular focus on saving.