Conclusion

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

Chapter 6 in Optimal Currency Areas and the Euro, Volume III, 2026, pp 105-117 from Springer

Abstract: Abstract This chapter concludes our final volume and situates its results within the broader context of our trilogy (Mundell’s OCA framework). It also draws policy implications for the design of an effective mechanism of fiscal federalism in the Eurozone (EZ). We propose 6 principles for a viable stabilization mechanism, all derived from the literature and our empirical results: automaticity, symmetry, temporariness, transparency, proportionality, and complementarity. The chapter also evaluates existing proposals for a common EZ fiscal capacity, including a European scheme for unemployment reinsurance, a centralized budget, and a cyclical transfer system. Finally, the chapter discusses our view that public trust, clear fiscal rules, and strong governance are essential ingredients to the political feasibility of a long-term risk-sharing arrangement in the EZ.

Keywords: Optimal currency areas; Eurozone; fiscal federalism; Risk sharing; Political feasibility (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-032-12903-1_6

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DOI: 10.1007/978-3-032-12903-1_6

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