Fiscal Policy In The European Union

This book provides a comprehensive analysis of national fiscal policies in the European Union and in the European Monetary Union. Adopting a critical perspective, the book offers a deep insight into the consequences of the current strategy of national fiscal policies on economic activity.

This is an extensive study concerned with the potential effects of fiscal policy on financial markets in the EU. It takes into account the gradual liberalization of capital movements through Western Europe & the framework of the European Monetary System.

This book examines key aspects of the measurement of fiscal policy making in the EU fiscal surveillance framework, highlighting strengths and weaknesses of current assessment practice. Based on the proceedings of a workshop organized by the European Commission’s Directorate-General Economic and Financial Affairs, the book’s contributions from leading experts will be of particular value to individuals and institutions involved in the fields of national and international economics and finance. Key Features: chapters are arranged within three main sections: Long-term sustainability; Measurement of the underlying budgetary position and discretionary fiscal policy; Reliability of fiscal indicators edited by Martin Larch and João Nogueira Martins expert contributors include António Afonso, Fabrizio Balassone, Fernando Ballabriga, Roy Barrell, Peter Brandner, Peter Claeys, Leopold Diebalek, Per Eckefeldt, Jonas Fischer, Daniele Franco, Jagadeesh Gokhale, Ian Hurst, Walpurga Köhler-Töglhofer, György Kopits, Martin Larch, Carlos Martinez-Mongay, James Mitchell, João Nogueira Martins, Jan in ’t Veld, Stefania Zotteri text amply supported by charts and tables. bibliography and Index

Does the European Union need closer fiscal integration, and in particular a stronger fiscal centre, to become more resilient to economic shocks? This book looks at the experience of 13 federal states to help inform the heated debate on this issue. It analyses in detail their practices in devolving responsibilities from the subnational to the central level, compares them to those of the European Union, and draws lessons for a possible future fiscal union in Europe. More specifically, this book tries to answer three sets of questions: What is the role of centralized fiscal policies in federations, and hence the size, features and functions of the central budget? What institutional arrangements are used to coordinate fiscal policy between the federal and subnational levels? What are the links between federal and subnational debt, and how have subnational financing crises been handled, when they occurred? These policy questions are critical in many federations, and central to the current discussions about future paths for the European Union. This book brings to the table new, practical insights through a systematic and comprehensive comparison of the EU fiscal framework with that of federal states. It also departs from the decentralization perspective that has been prominent in the literature by focusing on the role of the centre (which responsibilities are centralized at the federal level and how they are handled, rather than which functions belong to the local level). Such an approach is particularly relevant for the European Union, where a fiscal union would imply granting new powers to the centre.

This paper examines the interest spending and taxation channels through which EMU could affect the public finances. It provides a framework for examining different views on a further narrowing of interest rate differentials. A model of Blanchard and Fischer is amended to analyze the two channels, and empirical evidence on the tax harmonization process is presented. The paper argues that “high-debt” and “high-tax” countries pursuing prudent fiscal policies could benefit the most from EMU: if monetary and widespread fiscal discipline are jointly established, interest rates could decline rapidly, while tax harmonization is likely to be gradual.

To what extent should local and regional governments in the European Union be allowed to determine their own fiscal policies? This book explores the core issues of fiscal federalism in the European context. It combines theoretical and empirical analysis in addressing such questions as: * what sort of fiscal federalism is appropriate in the European Community * what are the dangers of more centralization * what are the costs of greater decentralization

Successive reforms have brought many positive elements to the European Union’s fiscal framework. But they have also increased its complexity. The current system involves an intricate set of fiscal constraints, which hampers effective monitoring and public communication. Compliance has also been weak. This note discusses medium-term reform options to simplify the framework and improve compliance. Based on model simulations and practical considerations, it argues for moving to a two-pillar approach, with a single fiscal anchor (public debt-to-GDP) and a single operational target (an expenditure growth rule, possibly with an explicit debt correction mechanism) linked to the anchor.

Considers the way in which the European Union has affected autonomy in macroeconomic policy-making of the member states. It begins with an introduction to economic ideas, and explores current themes surrounding monetary and fiscal policy and European integration, including economic policy co-ordination, objectives in national policy-making and moti