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The Stabilising Role of US Federal Fiscal Institutions — What Lessons for the Euro Area?

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  • Cinzia Alcidi

    (Centre for European Policy Studies (CEPS))

  • Gilles Thirion

    (Centre for European Policy Studies (CEPS))

Abstract

The classic argument for a euro area “fiscal capacity”, understood in this contribution as a centralised fiscal stabiliser, revolves around the need to dampen the effects of asymmetric shocks. According to those preaching this conventional wisdom, a common fiscal stabiliser designed along the lines of the US federal fiscal system would have stabilised incomes in member states hit the hardest, thereby avoiding the divergence that has unfolded in the aftermath of the financial crisis between the South, led by Italy and Greece, and the North, led by Germany and the Benelux countries.

Suggested Citation

  • Cinzia Alcidi & Gilles Thirion, 2017. "The Stabilising Role of US Federal Fiscal Institutions — What Lessons for the Euro Area?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 52(3), pages 137-142, May.
    • Handle: RePEc:spr:intere:v:52:y:2017:i:3:d:10.1007_s10272-017-0662-y
    DOI: 10.1007/s10272-017-0662-y
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    Cited by:

    1. Alcidi, Cinzia & Thirion, Gilles, 2017. "Fiscal Risk Sharing and Resilience to Shocks: Lessons for the euro area from the US," CEPS Papers 12595, Centre for European Policy Studies.
    2. Paolo D’Imperio & Waltraud Schelkle, 2017. "What Difference Would a Capital Markets Union Make for Risk-Sharing in the EU?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 86(2), pages 77-88.

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