Disinflation in the Italian economy in an optimal control setting

In this article we use optimal control techniques and a nonlinear, small-size econometric model of the Italian economy, with the purpose of analyzing the disinflation process that has characterized the Italian economy during the period 1984–1987. Within the optimization framework, we question a wide range of issues of political economy, the role of incomes policy, and nominal anchors in promoting low-cost disinflation.