15 Nov 2018

Does a single monetary policy need a single fiscal counterpart?

Daniel Gros

0
Download Publication

32 Downloads

The absence of a single fiscal policy in the euro area does not necessarily constitute a problem for the ECB. In a deep financial crisis poorly coordinated national fiscal policies are likely to be insufficient. But outside crisis periods spill-over effects of fiscal policy are likely to be small and of uncertain sign. Moreover, fiscal policy is always subject to policy errors and other shocks. With many different national policies, individual errors and shocks would tend to cancel out each other, at least partially, thus delivering a more stable policy in the aggregate, which should facilitate the task of the ECB to maintain price stability. EMU reform efforts should thus not aim at creating a unified fiscal policy.

This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs.

Related Publications

Browse through the list of related publications.

The European added value of the Recovery and Resilience Facility

An assessment of the Austrian, Belgian and German plans

Where the (euro) buck stops

Facing the next big crisis with a better EU budget

The Next Revision of the Financial Regulation and the EU Budget Galaxy

How to safeguard and strengthen budgetary principles and parliamentary oversight

Optimal tariff versus optimal sanction

The case of European gas imports from Russia

Comparing and assessing recovery and resilience plans – Second edition

Italy, Germany, Spain, France, Portugal, Slovakia, Austria and Belgium

When the taps are turned off

How to get Europe through the next winter without Russian gas