Fiscal Policy Coordination and Competitiveness Surveillance: What Solutions to What Problems?

CEPS Policy Brief No. 213

6 Pages Posted: 9 Sep 2010

See all articles by Daniel Gros

Daniel Gros

Centre for European Policy Studies, Brussels; CESifo (Center for Economic Studies and Ifo Institute)

Cinzia Alcidi

CEPS; Graduate Institute of International and Development Studies (IHEID)

Date Written: September 7, 2010

Abstract

Close coordination of national fiscal policy and surveillance of competitiveness seem highly desirable within a monetary union. But are they also feasible? This note argues that surveillance of competitiveness risks concentrating on symptoms (rising wages in the non-tradable sector), rather than the underlying causes (credit-financed booms). Moreover, the economic rationale for fiscal policy coordination (beyond the strict enforcement of the Stability and Growth Pact – SGP) seems to be weak during normal times. While it makes sense to coordinate the fiscal response of member states to the present crisis, it does not seem appropriate to develop new permanent mechanisms for the coordination of national fiscal policy.

Keywords: credit, finance, fiscal policy, competitiveness, monetary union, risk, crisis

Suggested Citation

Gros, Daniel and Alcidi, Cinzia, Fiscal Policy Coordination and Competitiveness Surveillance: What Solutions to What Problems? (September 7, 2010). CEPS Policy Brief No. 213, Available at SSRN: https://ssrn.com/abstract=1673745

Daniel Gros (Contact Author)

Centre for European Policy Studies, Brussels ( email )

1 Place du Congres
B-1000 Brussels, 1000
Belgium

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Cinzia Alcidi

CEPS ( email )

1 Place du Congres
Brussels, 1000
Belgium

Graduate Institute of International and Development Studies (IHEID) ( email )

132, Rue de Lausanne
Geneva, 1211
Switzerland

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