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15 - Reviving the Case for Policy Coordination in EMU

from Part III - The Economic and Fiscal Dimensions

Published online by Cambridge University Press:  28 September 2023

By
Maria Demertzis ,
Marta Domínguez Jiménez  and
Nicola Viegi
Edited by
Dariusz Adamski ,
Fabian Amtenbrink  and
Jakob de Haan
Dariusz Adamski
Affiliation:
University of Wroclaw
Fabian Amtenbrink
Affiliation:
Erasmus Universiteit Rotterdam
Jakob de Haan
Affiliation:
University of Groningen
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Summary

Fiscal policy in the euro area has been bound by the Maastricht Treaty criteria. The chapter evaluates what this has meant for the effectiveness of fiscal policy, and observes that it has led to suboptimal investments, has been on average procyclical, and has let monetary policy carry the burden of macroeconomic management. The chapter shows that by construction the Maastricht framework has been one that constrains countries, rather than coordinating them. Moving forward, it can be expected that fiscal policy will have a much more active role to play. NextGenerationEU can serve as a good template for coordinating fiscal policy, at least for the big European public goods, like the climate.

Type
Chapter
Information
The Cambridge Handbook of European Monetary, Economic and Financial Integration , pp. 269 - 289
Publisher: Cambridge University Press
Print publication year: 2023

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