Fiscal Transfers and Structural Reforms in the European Monetary Union

Holger Zemanek

MPRA Paper from University Library of Munich, Germany

Abstract: In a monetary union, fiscal transfers are an important policy tool to adjust to asymmetric shocks. However, fiscal transfers cannot substitute structural reforms especially when shocks are permanent. In this way, the design of fiscal transfer systems determine whether structural reforms or non-reforming is preferred by governments. Inter-regional transfers provide the lowest incentive for structural reforms. Inter-temporal transfers might promote structural reforms as long as debt cannot be accumulated. Therefore, I oppose an EU-tax budget, call for a strict application of the Stability and Growth Pact, and explain low reform activity in the EMU by interest rate convergence.

Keywords: Fiscal Transfers Systems; Structural reforms; Principal-Agent Model; European Monetary Union; EU Taxation (search for similar items in EconPapers)
JEL-codes: D78 E61 E62 F15 P11 (search for similar items in EconPapers)
Date: 2009-12-15
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/19357/1/MPRA_paper_19357.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/19398/3/MPRA_paper_19398.pdf revised version (application/pdf)

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:pra:mprapa:19357

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().