SHOULD EUROPE BECOME A FISCAL UNION?

Should Europe opt for a fiscal union? The answer requires a consensus on whether Europe should move towards a closer political union and develop into a federal state with substantial fiscal capacity at the central government level. It also depends on whether one expects the creation of a fiscal unio...

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Bibliographic Details
Published in:CESifo forum 2012-04, Vol.13 (1), p.35
Main Author: Keuschnigg, Christian
Format: Article
Language:English
Subjects:
Bank failures
Banking industry
Bankruptcy
Capital costs
Capital markets
Debt financing
Deficit financing
Economic impact
Economic models
Eurozone
Externality
Fiscal policy
Foreign exchange rates
Interest rates
International trade
Labor costs
Labor market
Monetary unions
Occupational mobility
Political behavior
Politics
Productivity
Risk premiums
Sovereign debt
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Summary:Should Europe opt for a fiscal union? The answer requires a consensus on whether Europe should move towards a closer political union and develop into a federal state with substantial fiscal capacity at the central government level. It also depends on whether one expects the creation of a fiscal union to be instrumental in solving the current economic crisis in Europe. The following section analyzes the emergence of the economic and fiscal imbalances that led to the current crisis. The third section discusses the case for a fiscal union and argues that establishing a fiscal union will not address the key problems that have led to the current crisis. The final section offers some conclusions. [PUB ABSTRACT]
ISSN:1615-245X
2190-717X