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Designing a fiscal union for the euro area

Ekonomia i Prawo. Economics and Law

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Title Statement Designing a fiscal union for the euro area
 
Added Entry - Uncontrolled Name Kąkol, Magdalena; Maria Curie-Skłodowska University
 
Uncontrolled Index Term EMU; fiscal union; euro area budget
E61; E62; E63; F36; F42; F45
 
Summary, etc. <p align="center">Motivation: Fiscal integration constitutes an important adjustment mechanism to cope with asymmetric shocks within a monetary union which does not fulfil many criteria of an optimal currency area. As is currently the case in the euro area, national governments implement discretionary fiscal policy to try to cope with the adverse economic shocks themselves and to try to stabilise income which leads to high budget deficits and public indebtedness in many euro area countries. While conducting fiscal policy at supranational level and fiscal transfers within EMU would allow for sufficient cross-country risk sharing and contribute to macroeconomic stability of the whole euro area.</p><p align="center">Aim: The aim of the paper is to give economic rationale and explain the significance of fiscal union for the effective functioning of a common currency area, and especially its macroeconomic stability as well as to present various forms of fiscal integration and to assess the possibility of their introduction within the euro area taking into account the current degree of economic integration, principles of conducting macroeconomic policy and its outcomes, the actual situation in the field of public finances and political circumstances in EMU and its member countries.</p><p align="center">Results: The greatest potential for macroeconomic stability — both in terms of asymmetric shocks, as well as these affecting the entire euro area — ensures the establishment of a large federal Eurozone budget. However, in a situation of a lack of political will to move forward into a political union, the approach to ensure fiscal stabilisation should include: creating even a small euro area-wide budget and the common Ministry of Finance, introducing a European unemployment (re-)insurance scheme with further harmonization of labour markets, equipping the banking union with a fiscal backstop as well as making national fiscal policies more stabilising and avoiding to impose self-defeating fiscal adjustments on crisis countries.</p>
 
Publication, Distribution, Etc. Uniwersytet Mikołaja Kopernika w Toruniu
2017-12-31 00:00:00
 
Electronic Location and Access application/pdf
http://apcz.umk.pl/czasopisma/index.php/EiP/article/view/EiP.2017.029
 
Data Source Entry Ekonomia i Prawo. Economics and Law; Vol 16, No 4 (2017)
 
Language Note en
 
Terms Governing Use and Reproduction Note Copyright (c) 2018 Ekonomia i Prawo. Economics and Law