Debt sustainability and economic convergence of euro-area Member States: Challenges and Solutions

Paolo Manasse

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: This paper argues that fiscal convergence in the Euro area has been achieved at the expenses of real divergence in unemployment, investment and at, at least temporarily, growth. Statistical and econometric analysis support the view that the current fiscal framework has addressed debt sustainability concerns, but has imparted a pro-cyclical bias, which has contributed to economic divergence. The recent flexibility guidelines are a step in the right direction, but they are unlikely to have sizable effects. A reform of the fiscal framework and a mechanism for an intra-European unemployment insurance scheme is proposed.

JEL-codes: E02 E61 E62 H6 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-eec and nep-mac
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:wp1035

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