Fiscal integration and growth stimulation in Europe (with an appendix by Jacques Drèze and Jean-François Carpantier)
(2014) Recherches économiques de Louvain — Vol. 80, p. 5-45 (2014)
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- The current crisis of the Economic and Monetary Union (EMU) combines financial, economic and political difficulties that confirm the incompleteness of economic integration in the euro area and could even question the sustainability of the EMU itself. The current debate on crisis resolution underscores the importance of macroeconomic uncertainties. Indeed, the current crisis was not really anticipated, and short-to-medium term macroeconomic developments in Europe remain highly uncertain today. Although the current crisis has taken its roots in financial markets – due to excessive risk-taking behaviour by intermediaries and investors under inadequate monitoring – its macroeconomic impact today puts downward pressures on both the economic outlook and the public finances for the whole euro area. This reveals the urgency of deepening economic integration, a need that remained masked by the favourable developments until 2007, but that cannot be ignored by a set of countries no longer apt to rely on currency devaluation as an adjustment mechanism.
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Dreze, J., Durré, A., & Carpantier, J.-F. (2014). Fiscal integration and growth stimulation in Europe (with an appendix by Jacques Drèze and Jean-François Carpantier). Recherches économiques de Louvain, 80, 5-45. https://doi.org/10.3917/rel.802.0005 (Original work published 2014)