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A monetary union without a fiscal union?

  • This paper studies whether a monetary union needs a fical union in particular in the Eurozone. On 1 January 1999, despite controversial debates, the rule-based Economic and Monetary Union (EMU) started without a fiscal union. I show that there is weak economic convergence in the EMU since 18 years. In addition, I argue that a fiscal union does not solve the past disintegration failures. I demonstrate that the major flaws are domestic policy failures and not institutional failures in the euro area. Consequently, establishing a monetary union without having a political union is a risky strategy. Indeed, the rule-based architecture of Maastricht is not guilty for the crisis alone. The root causes are the political flaws aligned with the rather weak enforcement of the rules. I propose a genuine redesign of the rule-based paradigm without a fiscal union. Yet a monetary union without a fiscal union works effectively if the rule enforcement is more automatic and independent of domestic and European policy-making.

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Author of HS ReutlingenHerzog, Bodo
Erschienen in:Monetary unions : background, advantages and disadvantages
Publisher:nova science publishers
Place of publication:New York
Editor:SÅ‚awomir Ireneusz Bukowski
Document Type:Book chapter
Publication year:2018
Tag:economic governance; fiscal union; rule-based architecture
Page Number:20
First Page:99
Last Page:118
PPN:Im Katalog der Hochschule Reutlingen ansehen
DDC classes:330 Wirtschaft
Open access?:Nein