The effects of unification: markets, policy, and cyclical convergence in Italy, 1861–1913

This paper uses time-series evidence on construction movements to examine the convergence of regional business cycles in the decades that followed Italy's Unification. The aggregate series point to cyclical convergence, but a sector-level analysis traces this result to the decline in differentiated "regional-policy" shocks. The regional market cycles diverged, as regions specialized in different sectors of production; market-cycle convergence is observed only within the "industrial triangle," the regions of which also developed different specializations. This suggests that the balance between growing interdependence and growing differentiation is not general, as the current literature presumes, but specialization-specific.