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Assessing Next Generation EU

Lorenzo Codogno and Paul Van den Noord

LEQS – LSE 'Europe in Question' Discussion Paper Series from European Institute, LSE

Abstract: The unprecedented fiscal package adopted by the European Council in the summer of 2020 ―dubbed Next Generation EU―is vital for the recovery of the euro area from the pandemic shock. However, there are risks that targets will not be met and that it may prove difficult to muster the same degree of European ‘solidarity’ in the future. Computations with a stylised macroeconomic model indicate that an alternative approach, with ex ante risk sharing through the creation of a Eurobond and permanent fiscal capacity at the centre, would be at least as powerful, yet it would be more sustainable, automatic and timely.

Keywords: Fiscal Policy; Business fluctuations; Safe sovereign assests; Fiscal capacity (search for similar items in EconPapers)
Date: 2021-02
New Economics Papers: this item is included in nep-eec and nep-mac
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