Roel Beetsma, Martin Larch, (2018), «Risk reduction and risk sharing in EU fiscal policymaking: The role of better fiscal rules», VoxEU, 9 Μαΐου
The CEPR Policy Insight by 14 French and German economists (Bénassy-Quéré et al. 2018) marks a crucial stage in a long-lasting debate on how to reform the euro area. It offers a convincing synthesis in a discussion which until then had been held hostage by diametrically opposed camps: the advocates of risk reduction led by Germany and the apologists for risk sharing led by France. Bénassy-Quéré et al. (2018) convincingly underscore that the debate can be won neither on the battleground of the first best nor on the moral high ground. Progress requires movement on both fronts – risk sharing and risk reduction are complements, not substitutes.
We share this view. In this column we focus on fiscal policy dimensions and argue that finding the appropriate balance between risk sharing and risk reduction will be of crucial importance. We are convinced that fiscal risk reduction must be part and parcel of any viable reform proposal. In essence, establishing new arrangements of fiscal risk sharing such as a central fiscal capacity will only be politically feasible and economically effective if accompanied by a serious effort to strengthen existing elements of fiscal risk reduction.
- Agnès Bénassy-Quéré, Markus K Brunnermeier, Henrik Enderlein, Emmanuel Farhi, Marcel Fratzscher, Clemens Fuest, Pierre-Olivier Gourinchas, Philippe Martin, Jean Pisani-Ferry, Hélène Rey, Isabel Schnabel, Nicolas Véron, Beatrice Weder di Mauro, Jeromin Zettelmeyer, (2018), «How to reconcile risk sharing and market discipline in the euro area», Vox, 17 Ιανουαρίου
- Sebastian Dullien, (2018), «Blind spots and unintended consequences of the 14 economists’ Policy Insight», VoxEU, 11 Απριλίου