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Economic spillover and policy coordination in the Euro area

Author

Listed:
  • Klaus Weyerstrass
  • Johannes Jaenicke
  • Reinhard Neck
  • Gottfried Haber
  • Bas van Aarle
  • Koen Schoors
  • Niko Gobbin
  • Peter Claeys

Abstract

There is a broad consensus among economists that the increased interdependence that comes from sharing a common currency and a single monetary policy justifies some degree of economic policy coordination between euro area Member States. However, empirical studies have, thus far, offered inconclusive evidence regarding the comparative importance of different types of economic spillover. Accordingly, estimates of the welfare gains from economic policy coordination in the euro area have varied considerably. This study presents original research on the nature of economic interdependence under European Economic and Monetary Union. Its main contribution is to provide plausible estimates of the sign and size of economic spillover in the euro area and the welfare gains from economic policy coordination. These results are relevant for the European Commission's ongoing work on strengthening economic governance in the context of the Stability and Growth Pact and the Lisbon Strategy.

Suggested Citation

  • Klaus Weyerstrass & Johannes Jaenicke & Reinhard Neck & Gottfried Haber & Bas van Aarle & Koen Schoors & Niko Gobbin & Peter Claeys, 2006. "Economic spillover and policy coordination in the Euro area," European Economy - Economic Papers 2008 - 2015 246, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  • Handle: RePEc:euf:ecopap:0246
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. António Afonso, 2010. "Expansionary fiscal consolidations in Europe: new evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 17(2), pages 105-109, January.
    2. Ansgar Belke & Thomas Osowski, 2016. "Measuring fiscal spillovers in EMU and beyond: A global VAR approach," ROME Working Papers 201606, ROME Network.
    3. Michele Giuranno, 2009. "Pooling Sovereignty and Subsidiarity Principle," Discussion Papers 09/01, Department of Economics, University of York.
    4. Konrad Szelag, 2007. "Expected and actual impact of EMU on growth, public finances and structural reforms in the euro area," NBP Working Papers 40, Narodowy Bank Polski, Economic Research Department.
    5. Klaus Weyerstrass & Reinhard Neck, 2008. "Macroeconomic Consequences of the Adoption of the Euro: The Case of Slovenia," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 14(1), pages 1-10, February.
    6. Fritz Breuss, 2009. "Ten Years of EMU – Achievements, Drawbacks and Challenges," WIFO Monatsberichte (monthly reports), WIFO, vol. 82(1), pages 61-84, January.
    7. repec:kap:iaecre:v:14:y:2008:i:1:p:1-10 is not listed on IDEAS
    8. António Afonso, 2007. "Expansionary fiscal consolidations in Europe: part of conventional wisdom?," Money Macro and Finance (MMF) Research Group Conference 2006 50, Money Macro and Finance Research Group.
    9. Bode, Oliver & Gerke, Rafael & Schellhorn, Hannes, 2006. "Die Wirkung fiskalischer Schocks auf das Bruttoinlandsprodukt," Working Papers 01/2006, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    10. Tomasz Michalak & Jacob Engwerda & Joseph Plasmans, 2009. "Strategic Interactions between Fiscal and Monetary Authorities in a Multi-Country New-Keynesian Model of a Monetary Union," CESifo Working Paper Series 2534, CESifo Group Munich.
    11. Nikos Koutsiaras, 2010. "How to Spend it: Putting a Labour Market Modernization Fund in Place of the European Globalization Adjustment Fund," Journal of Common Market Studies, Wiley Blackwell, vol. 48, pages 617-640, June.
    12. Andrés Leal Marcos & Julio López Laborda, 2009. "Efectos externos del endeudamiento sobre la calificación crediticia de las Comunidades Autónomas," Hacienda Pública Española, IEF, vol. 189(2), pages 81-106, June.

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