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Assessing Next Generation EU

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  • Lorenzo Codogno
  • Paul van den Noord

Abstract

The unprecedented fiscal package adopted by the European Council in the summer of 2020 ―dubbed Next Generation EU―is vital for the recovery of the euro area from the pandemic shock. However, there are risks that targets will not be met and that it may prove difficult to muster the same degree of European ‘solidarity’ in the future. Computations with a stylised macroeconomic model indicate that an alternative approach, with ex ante risk sharing through the creation of a Eurobond and permanent fiscal capacity at the centre, would be at least as powerful, yet it would be more sustainable, automatic and timely.

Suggested Citation

  • Lorenzo Codogno & Paul van den Noord, 2021. "Assessing Next Generation EU," LEQS – LSE 'Europe in Question' Discussion Paper Series 166, European Institute, LSE.
    • Handle: RePEc:eiq:eileqs:166
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    Cited by:

    1. Nicola Acocella, 2022. "Rediscovering Economic Policy in Europe?," Review of Economics and Institutions, Università di Perugia, vol. 13(1-2).
    2. Philipp Pfeiffer & Janos Varga & Jan in 't Veld, 2021. "Quantifying Spillovers of Next Generation EU Investment," European Economy - Discussion Papers 144, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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    Keywords

    Fiscal Policy; Business fluctuations; Safe sovereign assests; Fiscal capacity;
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