Garegnani, Ackley and the years of high theory at Svimez

In the late 1950s, Svimez (Associazione per lo sviluppo dell'industria nel Mezzogiorno) was an influential research centre on Italian economic and regional policies. It was advised and visited by top international development experts and by leading Italian economists. Pierangelo Garegnani, fresh from his seminal Ph.D. thesis on capital theory at Cambridge, wrote a report for Svimez, published in 1962, on the relevance of Keynes’ theory for economies at an intermediate stage of development, like Italy. Interestingly, in 1963 Gardner Ackley published a similar report for Svimez. The theoretical parts of Garegnani’s report were published in English in 1978-79 and 2015. In a final applied section, which has not yet been published, Garegnani estimates that a fuller utilisation of productive capacity would have allowed for the creation of 550 thousand additional jobs without problems relating to the balance of payments. In this section, Garegnani also raises several interesting theoretical issues. Ackley’s report is an econometric explanation of the Italian ‘economic miracle’ based on a demand-led growth supermultiplier model – a theoretical approach re-discovered by Bortis and Serrano, and recently taken up by Marc Lavoie and others. A comparison between these two genuine Keynesian approaches looks very promising.