Prospects for an EMU between Federalism and Nationalism

Tinbergen Institute Discussion Paper 14-008/VI

37 Pages Posted: 11 Jan 2014

See all articles by Frank A. G. den Butter

Frank A. G. den Butter

Vrije Universiteit Amsterdam, School of Business and Economics; Tinbergen Institute

Mathieu Segers

University of Utrecht - Department of History and Art History

Date Written: January 9, 2014

Abstract

Which ways and means are available for the macroeconomic and fiscal coordination and/or integration within the EMU-framework? Which are the pros and cons of these scenarios? This paper combines economic theory, empirical analysis and insights regarding EMU’s institutional history in order to come to a compromise proposal for an EMU between nationalism and federalism. We take the present status quo acts as a starting point. We describe the tension between the arguments in economic theory on policy coordination and the way contagion can be avoided. In addition we assess the practical political implementation of these arguments. We sketch concrete options for a ‘deepening of economic coordination’ in the EMU, as announced by Van Rompuy in his 2013 London speech, without moving to a full-fledged federalist EPU.

Keywords: history of EMU, Kronungstheorie, optimal currency area, policy coordination, contagion, EPU, social preferences, EMU’s future

JEL Classification: E61, F55, G15, H77, N14

Suggested Citation

den Butter, Frank A.G. and Segers, Mathieu, Prospects for an EMU between Federalism and Nationalism (January 9, 2014). Tinbergen Institute Discussion Paper 14-008/VI. Available at SSRN: https://ssrn.com/abstract=2376863 or http://dx.doi.org/10.2139/ssrn.2376863

Frank A.G. Den Butter (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Mathieu Segers

University of Utrecht - Department of History and Art History ( email )

Vredenburg 138
NL-3508 TC Utrecht, 3511 BG
Netherlands

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