Reforms to Stabilize Italy May Backfire

When Matteo Renzi took over as Italy's prime minister in February 2014, he had two main goals. The first was to introduce a series of policies -- most notably, a new labor law -- to fight unemployment and generate economic growth. The second was to remodel Italy's political system to ensure more stable governments and to reduce the financial risk that political uncertainty posed. Though Renzi's economic reforms have been only moderately successful (unemployment is falling slowly, while growth has been timid), it is the political reforms that will define the future of his government and that could open a new phase of uncertainty for the rest of the eurozone....