Twenty Eight States: The Fiscal Consolidation of the European Union (original) (raw)
Related papers
Federalising the Eurozone: Towards a True European Budget
Discussions about a future fiscal capacity for the euro area are too often limited to a comparison of the technical advantages and disadvantages of different modalities of crosscountry fiscal shock absorbers. This paper aims to broaden the debate, by connecting these discussions with debates on fiscal union and the exercise of political power in EMU. Through an analysis of past and current debates on EMU, the paper identifies five different rationales for deepening budgetary integration in a monetary union: ensuring fiscal discipline and stable sovereign debt markets, protecting euro area countries against the risk of asymmetric shocks, equipping the euro area with a capacity to stabilise the economy over the cycle, providing budgetary support for convergence and providing an appropriate fiscal backstop for the banking union. The paper discusses the relevance of these various rationales in today's EMU and their different implications as regards to mutualising budgetary resources and powers.
A Fiscal Union for the Euro: Some Lessons from History
2011
The recent financial crisis 2007-2009 was the longest and the deepest recession since the Great Depression of 1930. The crisis that originated in subprime mortgage markets was spread and amplified through globalised financial markets and resulted in severe debt crises in several European countries in 2010 and 2011. Events revealed that the European Union had insufficient means to halt the spiral of European debt crisis. In particular, no pan-European fiscal mechanism to face a global crisis is available at present. The aim of this study is to identify the characteristics of a robust common fiscal policy framework that could have alleviated the consequences of the recent crisis. This is done by using the political and fiscal history of five federal states; Argentina, Brazil, Canada, Germany and the United States.
A Fiscal Federalist Perspective of the European Political Economy
International Journal of Policy Sciences and Law, 2020
The present essay focuses on the financial aspects of the European federalist structure as a result of the Maastricht Treaty and its accompaniments. The European Union (EU) was an initiative for European integration on three integral aspects, namely, the three pillars which managed EU's legislature on economic, military, foreign, judicial, social, and environmental policies. The integration also laid down the "convergence criteria" to institute Euro as a common European currency in 2002. The Treaty on the Functioning of the European Union (TFEU) -the second of the two foundational treaties of the EUdiscusses trade, domestic market, customs, taxation, and monetary policies along with other institutional and financial provisions for the member states of the Union. These two treaties form the legislative basis of European federalism. Drawing from the examples of both the
2020
Discussions about a future fiscal capacity for the euro area are too often limited to a comparison of the technical advantages and disadvantages of different modalities of cross-country fiscal shock absorbers. This paper aims to broaden the debate, by connecting these discussions with debates on fiscal union and the exercise of political power in EMU. Through an analysis of past and current debates on EMU, the paper identifies five different rationales for deepening budgetary integration in a monetary union: ensuring fiscal discipline and stable sovereign debt markets, protecting euro area countries against the risk of asymmetric shocks, equipping the euro area with a capacity to stabilise the economy over the cycle, providing budgetary support for convergence and providing an appropriate fiscal backstop for the banking union. The paper discusses the relevance of these various rationales in today's EMU and their different implications as regards to mutualising budgetary resourc...
Eastern European Economics, 2006
In this paper, we track fiscal authority behaviour in the ten new EU member states (NSM) in the period which immediately preceded their EU accession. We first present basic stylized facts about public budgets of those countries. The paper then analyses reasons which led to periods of fiscal consolidation in the NMS. Secondly, we also present evidence from Pre-Accession Economic and Convergence programmes of NMSs concerning planned steps of the fiscal authorities and try to contrast them with reality. Throughout the paper, we identify two different groups of countries which significantly differ in their fiscal behaviour. On the one side is the group of Baltic countries, displaying strong reform effort and responsible fiscal policy usually supported by strong economic growth. On the second extreme, we identify fiscally irresponsible central European countries and two Mediterranean islands displaying lax fiscal policies and little political will to implement costly reforms. Somewhere between stand Slovenia and Slovakia, first without a strong reform performance yet with budget deficits in compliance with the Stability and Growth Pact and later with recent reform efforts.
An analysis of the concept of fiscal federalism in relation to the European Union
2010
Sophie Ward makes the case that although the European Union has been a great success in some respects, in others it has been let down by an unwillingness to cooperate in areas outside of the common market. Fiscal federalism is one issue which must be resolved if the Union is to continue to build on its achievements. As Ward points out, enhanced coordination of fiscal policy will generate benefits for all of the EU members and does not necessarily have to be brought about by a centralisation of power which has in the past concerned Europeans.
The Impossible Trinity and the Prospects for an European Fiscal Union
After reviewing some of the recent EU economic governance reform provisions, the paper discusses three main in-built vulnerabilities of the euro area: the absence of coresponsibility for public debt; the strict prohibition of monetary financing; and the vicious circle represented by the fact that states are individually responsible for rescuing banks in their jurisdictions, but banks are exposed to their own governments through their holding of debt securitiesthe so-called impossible trinity. The paper argues that although changing the European Central Bank's mandate and building a banking federation could theoretically be contemplated, the only practical and feasible solution to the euro area crisis is the fiscal union. But the fiscal union still lacks a consensual blueprint and it would entail some form of a political union as well. With United Kingdom and the Czech Republic not agreeing to become parts of the fiscal compact, and a more self-confident but less European Germany, the prospects for such a solution based on euro solidarity and political will for deepening integration are uncertain.
Nein to ‘Transfer Union’: the German brake on the construction of a European Union fiscal capacity
Journal of European Integration, 2021
This paper argues that, on the development of European Union (EU)/Eurozone fiscal capacity German governments have consistently engaged in foot-dragging. Few German state elites have ever supported European fiscal capacity building beyond the EC budget. Following the outbreak of the Eurozone sovereign debt crisis, German governments agreed to the creation of financial support mechanisms only with reluctance. We see a case of continuity in German policy preferences driven by consistent ordoliberal and, specifically, moral hazard concerns. The important longterm change that we can observe relates to the growing importance for successive governments of avoiding audience costs driven by sceptical public opinion and the rise of a challenger party in German politics. German government support for a massive EU fiscal response to the economic crisis triggered by the COVID-19 pandemic demonstrates an exceptional policy position in favour of temporary financial mechanisms involving no fiscal transfers among member state governments.
Cesifo Working Paper Series, 2006
In this paper, we track fiscal authority behaviour in the ten new EU member states (NSM) in the period which immediately preceded their EU accession. We first present basic stylized facts about public budgets of those countries. The paper then analyses reasons which led to periods of fiscal consolidation in the NMS. Secondly, we also present evidence from Pre-Accession Economic and Convergence programmes of NMSs concerning planned steps of the fiscal authorities and try to contrast them with reality. Throughout the paper, we identify two different groups of countries which significantly differ in their fiscal behaviour. On the one side is the group of Baltic countries, displaying strong reform effort and responsible fiscal policy usually supported by strong economic growth. On the second extreme, we identify fiscally irresponsible central European countries and two Mediterranean islands displaying lax fiscal policies and little political will to implement costly reforms. Somewhere between stand Slovenia and Slovakia, first without a strong reform performance yet with budget deficits in compliance with the Stability and Growth Pact and later with recent reform efforts.