Introduction

Johannes Kabderian Dreyer () and Peter Alfons Schmid ()
Additional contact information
Johannes Kabderian Dreyer: Roskilde University (RUC), ISE
Peter Alfons Schmid: FOM University of Applied Sciences

Chapter 1 in Optimal Currency Areas and the Euro, Volume III, 2026, pp 1-16 from Springer

Abstract: Abstract This chapter introduces the final volume of our trilogy on the European currency union. Using the Optimal Currency Area (OCA) theory of Mundell (1961), the volume examines fiscal federalism as the missing pillar of the Euro’s architecture. Moreover, it discusses how the absence of a credible and rules-based mechanism of fiscal risk sharing amplified recent crises in the Eurozone (EZ). The chapter motivates the book’s central research question: Can an appropriately designed mechanism of fiscal transfers counteract asymmetric shocks in the EZ? The chapter also describes the book’s methodology and structure and presents a summary for our main findings. This includes the limited stabilizing role of fiscal flows from the current budget of the European Union (EU) and the trade-offs between stabilization and redistribution. Policy implications are presented, followed by the conclusion that the EZ needs a permanent, automatic, and transparent fiscal capacity to enhance economic stability.

Keywords: Eurozone; Fiscal federalism; Risk sharing; Asymmetric shocks; Stabilization (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-032-12903-1_1

Ordering information: This item can be ordered from
http://www.springer.com/9783032129031

DOI: 10.1007/978-3-032-12903-1_1

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().