Is a Fiscal Union Necessary in Europe?

Kempf, Hubert

Is a Fiscal Union Necessary in Europe? - 2013.


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The current difficulties of the Eurozone reopen the debate around its governance and the necessity of a fiscal union, that is, a set of collective fiscal laws in Europe. In this paper, we clarify that the European Union is already a fiscal union. We establish a simple typology of fiscal unions and we emphasize a crucial dilemma between idiosyncratic shocks and opportunistic behavior. We analyze the main shortcomings of the current European monetary construction and we offer five fundamental principles upon which a sound fiscal union can be established in Europe, ensuring the viability of the Euro.JEL Classification JEL: E61, F33, F42, H77.

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