The Return of Fiscal Policy: Eurozone Macroeconomic Governance after Covid

Francesco Saraceno ()
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Francesco Saraceno: OFCE – SciencesPo Paris

Annals of the Fondazione Luigi Einaudi. An Interdisciplinary Journal of Economics, History and Political Science, 2021, vol. 55, issue 2, 191-208

Abstract: The paper traces the developments of policies and institutions for the EMU in the past decades, linking them to evolutions of the consensus in macroeconomics. The EMU institutions were designed in the 1990s, when the consensus posited a very limited role for the government in business cycles regulation and in fostering growth. Accordingly, the burden of adjustment in the EMU in its current form is on market forces. The paper shows how the global financial crisis moved the cursor back towards an increased role for macroeconomic (most notably fiscal) policy; nevertheless, during the sovereign debt crisis Europe has been impervious to empirical and theoretical developments, remaining tangled in self-defeating austerity policies. The Covid crisis marked a turning point, with EU governments and institutions reacting boldly and quickly. The paper concludes investigating possible paths for reform, capable of adapting the European institutions to the newfound centrality of macroeconomic policies.

Keywords: EMU Reform; Global Financial Crisis; Surrogate Federalism; Debate in Macroeconomics. (search for similar items in EconPapers)
JEL-codes: B22 E63 E65 F45 N1 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:fle:journl:v:55:y:2021:i:2:p:191-208

DOI: 10.26331/1157

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