Fiscal federalism in crisis: lessons for Europe from the US
AbstractDrawing comparisons between the fiscal architecture and situation in the US and the European Union, Bruegel Research Fellow Zsolt Darvas answers three questions in this Policy Contribution- Why has the euro been hit so hard? How would a more federal European fiscal union closer to the US model have helped? How do the euro areaÂ?s fiscal architecture reform plans stand up in light of the US example? He concludes that a higher level of fiscal federation is not inevitable for the viability of the euro area, but current European fiscal reform proposals carry political risk and their implementation could be deficient or lack credibility. Introduction of a Eurobond covering up to 60 percent of member statesÂ? GDP would be a much more preferable solution.
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Bibliographic InfoPaper provided by Bruegel in its series Policy Contributions with number 420.
Date of creation: Jul 2010
Date of revision:
Other versions of this item:
- Zsolt Darvas, 2010. "Fiscal Federalism in Crisis: Lessons for Europe from the US," Working Papers 1002, Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest, revised 10 Sep 2010.
- Zsolt Darvas, 2010. "Fiscal Federalism in Crisis: Lessons for Europe from the US," IEHAS Discussion Papers 1021, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-14 (All new papers)
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- Costain, James & de Blas, Beatriz, 2012. "The role of fiscal delegation in a monetary union: a survey of the political economy issues," Working Papers in Economic Theory 2012/11, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
- Lannoo, Karel, 2011. "EU Federalism in Crisis," CEPS Papers 6498, Centre for European Policy Studies.
- Zsolt Darvas, 2012. "The euro crisis: ten roots, but fewer solutions," Policy Contributions 755, Bruegel.
- Nils aus dem Moore, 2010. "Eine Wirtschaftsregierung für Europa? – Die EU braucht bessere governance, aber kein gouvernement économique," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 24, December.
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