Marco Buti, Director General for Economic and Financial Affairs at the European Commission, visited the European University Institute (EUI) in Florence on 2 March to deliver the ADEMU seminar The EA fiscal stance and policy mix.

The recovery of the euro area has been particularly slow both by historical and international standards. Nine years after the economic and financial crisis struck, economic activity in the euro area is expanding at a moderate rate. However, the persistence of crisis legacies ─ such as the still-high unemployment rate and weak investment ─ suggest the recovery is not complete.

So far policy actions to support growth have excessively relied on monetary policy, resulting in an unbalanced policy mix. If monetary policy alone cannot lead to balanced growth, is there a case for an expansionary fiscal stance at the aggregate euro area level? Can this be reconciled with the Stability and Growth Pact?

The presentation explored the concept of fiscal space and the effectiveness of fiscal expansion in surplus countries for the euro area’s internal and external adjustment. Finally, it discussed the build-up over the medium term of a fiscal stabilisation function at the central level.

See the slides that were presented during the seminar.

About Marco Buti

Mr Buti joined the European Commission in 1987 and held various posts as an economist in DG ECFIN and the Commissioner’s cabinet before taking up a post as an economic adviser to the Commission President in 2002. He became director of the Directorate for the Economies of Member States at the DG ECFIN in 2003, before being appointed Deputy Director General in 2006. He became Director General in 2008.

A visiting professor at the EUI, Mr Buti has published extensively on economic and monetary union, macroeconomic policies, welfare state reforms, and European unemployment.