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Redemption?

Author Info

Listed author(s):
  • Catherine Mathieu

    (Observatoire français des conjonctures économiques)

  • Henri Sterdyniak

    (Observatoire français des conjonctures économiques)

Abstract

The economic crisis which started in 2008 led to a strong rise in public debts. The sovereign debt crisis in euro area southern countries breached the unity of the euro area and weakened the ‘single currency’ concept. The paper shows that this situation is not due to a lack of fiscal discipline in Europe, but to drifts in financial capitalism and to an inappropriately designed euro area economic policy framework.Public debts homogeneity needs to be resettled in Europe. European public debts should become safe assets again, and should not be subject to financial markets’ assessment. European Member Statesshould not be requested to pay for past sins through austerity measures, and should not strengthen fiscal discipline through rules lacking economic rationale. The paper deals with recent proposals which have been made to improve euro area governance (redemption fund, Eurobonds, public debt guarantee by the ECB). The paper advocates for a full guarantee of government bonds for the Member States who commit to an economic policy coordination process, which should target GDP growth and coordinated reduction of imbalances.

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File URL: http://spire.sciencespo.fr/hdl:/2441/f6h8764enu2lskk9p503i2pp3/resources/wp2013-06.pdf
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Paper provided by Sciences Po in its series Sciences Po publications with number 2013-06.

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Date of creation: May 2013
Handle: RePEc:spo:wpmain:info:hdl:2441/f6h8764enu2lskk9p503i2pp3
Contact details of provider: Web page: http://www.sciencespo.fr/

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Keywords: EU fiscal policy; EU governance;

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Find related papers by JEL classification:
  • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
  • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

References listed on IDEAS
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  1. Catherine Mathieu & Henri Sterdyniak, 2003. "Réformer le pacte de stabilité : l'état du débat," Revue de l'OFCE, Presses de Sciences-Po, vol. 84(1), pages 145-179.
  2. Olivier J. Blanchard & Daniel Leigh, 2013. "Growth Forecast Errors and Fiscal Multipliers," American Economic Review, American Economic Association, vol. 103(3), pages 117-120, May.
  3. Catherine Mathieu & Henri Sterdyniak, 2009. "La globalisation financière en crise," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 13-73.
  4. Catherine Mathieu & Henri Sterdyniak, 2007. "Comment expliquer les disparités économiques dans l'UEM ?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 315-352.
  5. Jürgen von Hagen & Jean Pisani-Ferry & André Sapir & Francois Gianviti & Anne O. Krueger, . "A European mechanism for sovereign debt crisis resolution: a proposal," Blueprints, Bruegel, number 446, September.
  6. Paul De Grauwe, 2012. "A Fragile Eurozone in Search of a Better Governance," The Economic and Social Review, Economic and Social Studies, vol. 43(1), pages 1-30.
  7. Jérôme Creel & Bruno Ducoudré & Catherine Mathieu & Henri Sterdyniak, 2005. "Doit-on oublier la politique budgétaire ?. Une analyse critique de la nouvelle théorie anti-keynésienne des finances publiques," Revue de l'OFCE, Presses de Sciences-Po, vol. 92(1), pages 43-97.
  8. Dawn Holland & Jonathan Portes, 2012. "Self-Defeating Austerity?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 222(1), pages 4-10, October.
  9. Thomas I. Palley, 2011. "Monetary Union Stability: The Need for a Government Banker and the Case for a European Public Finance Authority," IMK Working Paper 2-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  10. Fabrice Capoen & Henri Sterdyniak & Pierre Villa, 1994. "Indépendance des banques centrales, politiques monétaire et budgétaire : une approche stratégique," Revue de l'OFCE, Programme National Persée, vol. 50(1), pages 65-102.
  11. Hasan Doluca & Malte Hübner & Dominik Rumpf & Benjamin Weigert, 2012. "The European Redemption Pact: Implementation and macroeconomic effects," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 47(4), pages 230-239, July.
  12. repec:dau:papers:123456789/4777 is not listed on IDEAS
  13. Günter Coenen & Christopher J. Erceg & Charles Freedman & Davide Furceri & Michael Kumhof & René Lalonde & Douglas Laxton & Jesper Lindé & Annabelle Mourougane & Dirk Muir & Susanna Mursula & Carlos d, 2012. "Effects of Fiscal Stimulus in Structural Models," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(1), pages 22-68, January.
  14. repec:spo:wpecon:info:hdl:2441/1783 is not listed on IDEAS
  15. Servaas Deroose & Sven Langedijk & Werner Roeger, 2004. "Reviewing adjustment dynamics in EMU: from overheating to overcooling," European Economy - Economic Papers 2008 - 2015 198, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  16. repec:spo:wpecon:info:hdl:2441/1769 is not listed on IDEAS
  17. repec:spo:wpecon:info:hdl:2441/5284 is not listed on IDEAS
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