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European Fiscal Union: What Is It? Does It work? And Are There Really 'No Alternatives'?

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  • Clemens Fuest
  • Andreas Peichl

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Abstract

The view is widespread that there are just two options for the future of the Eurozone – either it is complemented by a fiscal union, or it will fall apart. In this paper, we discuss five possible elements of a fiscal union, of which three are in the centre of the current debate on fiscal union in the Eurozone. Second, we argue that the fiscal union will only work if political integration in Europe goes significantly beyond the current state of affairs. Third, we suggest an alternative approach, which places less emphasis on centralised fiscal policy coordination and focuses on financial sector reform, decentralised responsibility for government debt and sovereign debt restructurings in the case of fiscal crises.
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Suggested Citation

  • Clemens Fuest & Andreas Peichl, 2012. "European Fiscal Union: What Is It? Does It work? And Are There Really 'No Alternatives'?," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(1), pages 03-09, April.
  • Handle: RePEc:ces:ifofor:v:13:y:2012:i:1:p:03-09
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    File URL: http://www.cesifo-group.de/DocDL/forum1-12-focus1.pdf
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    References listed on IDEAS

    as
    1. Fuest, Clemens, 1993. "Stabile fiskalpolitische Institutionen für die Europäische Währungsunion," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1949 - 2007), ZBW – German National Library of Economics / Leibniz Information Centre for Economics, vol. 73(10), pages 539-545.
    2. Michael D. Bordo & Lars Jonung & Agnieszka Markiewicz, 2013. "A Fiscal Union for the Euro: Some Lessons from History ," CESifo Economic Studies, CESifo, vol. 59(3), pages 449-488, September.
    3. Neumann, Dirk & Bargain, Olivier & Dolls, Mathias & Fuest, Clemens & Peichl, Andreas, 2012. "Fiscal Union in Europe? Efficiency, Equity and Stabilizing Effects of an EU-Wide Income Tax," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 66063, Verein für Socialpolitik / German Economic Association.
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    More about this item

    Keywords

    Finanzverfassung; Finanzpolitik; Internationale wirtschaftspolitische Koordination; Haushaltskonsolidierung; Eurozone; Europäische Wirtschafts- und Währungsunion;

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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