What are the prerequisites for a euro area fiscal capacity?

Maria Demertzis and Guntram Wolff

Journal of Economic Policy Reform, 2020, vol. 23, issue 3, 342-358

Abstract: This paper discusses a pathway towards achieving fiscal union in the euro area. It outlines three steps and their prerequisites. In the first step, Banking Union would be completed to increase the financial stability of the euro area. It would render the “no bailout” clause more credible and thereby allow to deal better with insolvent governments. In the second step, more centralised funds would be created in order to provide important public goods and in order to deal with large asymmetric shocks. The third step, which is currently unattainable, consists of a true federalisation of important government functions.

Date: 2020
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Related works:
Working Paper: What are the prerequisites for a euro area fiscal capacity? (2020)
Working Paper: What are the prerequisites for a euro-area fiscal capacity? (2016)
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DOI: 10.1080/17487870.2019.1624169

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