IDEAS home Printed from https://ideas.repec.org/p/nbp/nbpmis/39.html
   My bibliography  Save this paper

Actual and potential impact of EMU on economic and budgetary policies of the EU

Author

Listed:
  • Konrad Szelag

Abstract

EMU and the euro have been existing for more than seven (almost eight) years. As it is known, EMU –and in particular the proper functioning of the single currency – requires the appropriate policy mix. But there is the significant macroeconomic and institutional imbalance within the euro area stemming from the coexistence of the single (centralized) monetary policy and nationally-oriented (decentralized) economic policies that are merely coordinated. Besides the EU economic coordination process and the policy mix have many other serious weaknesses. For that reason, in recent years there have been numerous proposals of the strengthening the economic policy coordination within the EU, which could be implemented in the nearest or a bit later future. They were related to improving coordination of economic, employment and budgetary policies within the EU or the euro area (including the Stability and Growth Pact – reformed in 2005). But those proposals and reform seem to be more or less enough to resolve some current problems, but they do not propose the complex and ultimate framework of economic policy within EMU in the long-term perspective. For that reason, at the present moment the EU still needs a serious debate on its future. The debate on the future of the EU started in 2000 – just a year after the introduction of the euro. After some years it might seem that the debate was over and the necessary solutions were found and adopted in the Constitutional Treaty. But following the last year’s events (of May and June 2005) – related to the rejection of the Constitution for Europe and initial non-agreement on the Financial Perspective 2007- 2013 – the debate on the future of the EU was reopen. Taking into account this crisis situation within the EU as well as the fact that the previous economic and political solutions have not been regarded as effective, it is worth to consider (or reconsider) some potential solutions that could be implemented in the EU in the longer future. For example, in the case of potential economic reforms, it would be interesting to consider whether the idea of the single economic/budgetary policy in the euro area is feasible (and desirable) in the long run. On the one hand, this idea is an extremely sensitive and controversial issue and there is strong opposition related to such a vision in the EU. But on the other hand, it seems to be very logical and natural because the logic and cumulative character of the integration process indicate that the evolution from the coordination of national economic and budgetary policies to the single economic/budgetary policy (coexisting together with the single monetary policy) seems to be an inevitable consequence of EMU in the longer term. In general, this study argues that EMU will have a serious impact on the further integration process within the EU, exerting in the course of time stronger and stronger pressure on its deepening – in both political and economic spheres (e.g. by complementing a monetary union with a political union).

Suggested Citation

  • Konrad Szelag, 2007. "Actual and potential impact of EMU on economic and budgetary policies of the EU," NBP Working Papers 39, Narodowy Bank Polski, Economic Research Department.
  • Handle: RePEc:nbp:nbpmis:39
    as

    Download full text from publisher

    File URL: http://www.nbp.pl/publikacje/materialy_i_studia/39_en.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.

    More about this item

    Keywords

    EMU; the euro; policy coordination; policy mix; economic policy; fiscal/budgetary policy; fiscal federalism; federation; political union;

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbp:nbpmis:39. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zbigniew Polański). General contact details of provider: http://edirc.repec.org/data/nbpgvpl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.