I've written about fiscal rules here, and here. They will become a feature of economic life in the next few years in Ireland. Philip Lane is probably the leading expert in this area, he has some really interesting slides up here based on his report here.
3 Responses to “Fiscal Reform Slides”
Niall
01/06/2011 at 9:50 am
In Balwin and Wyplosz' stages of integration, in hindsight, should a certain degree of common economic policy be a pre-requisite to Monetary Union? The Stability and Growth Pact was a half-hearted attempt to do this but as we've seen it wasn't adequate.
There's a huge debate going on about this at the moment Niall. Essentially the worry is that EMUs aren't stable no matter what the configuration might be, without 100% fiscal control coming from the centre, as in the US case. Sure, states and counties are free to budget and tax to a certain extent, but the main transfers happen from one set of states to another automatically. This is lacking in the EU case, and is the cause of almighty rows between nerdy economists 🙂
Niall
01/06/2011 at 12:48 pm
I totally agree with the US system, it seems a no-brainer as a way forward. Where have all these nerdy economists been the last 14 years? It is just baffling that such a large social project such as the Euro was not managed better. Greece was destined to be a problem from the very start, Ireland was in an upward cycle when the euro came into being so it was only natural that market forces took over here. As bad as some Irish Government decisions have been, they are not half as bad as the mismanagement of financial markets in Europe.
In Balwin and Wyplosz' stages of integration, in hindsight, should a certain degree of common economic policy be a pre-requisite to Monetary Union? The Stability and Growth Pact was a half-hearted attempt to do this but as we've seen it wasn't adequate.
There's a huge debate going on about this at the moment Niall. Essentially the worry is that EMUs aren't stable no matter what the configuration might be, without 100% fiscal control coming from the centre, as in the US case. Sure, states and counties are free to budget and tax to a certain extent, but the main transfers happen from one set of states to another automatically. This is lacking in the EU case, and is the cause of almighty rows between nerdy economists 🙂
I totally agree with the US system, it seems a no-brainer as a way forward. Where have all these nerdy economists been the last 14 years? It is just baffling that such a large social project such as the Euro was not managed better. Greece was destined to be a problem from the very start, Ireland was in an upward cycle when the euro came into being so it was only natural that market forces took over here. As bad as some Irish Government decisions have been, they are not half as bad as the mismanagement of financial markets in Europe.