Work Package 1: Long-term sustainability of a monetary and fiscal union
Focus on the long-run sustainability of EMU – in particular the sustainability of sovereign debt, and of union-wide burden-sharing mechanisms.
Specific Objectives:
- To clarify the determinants of sovereign debt crises, to develop new indicators that could be used to assess the risk of such crises occurring, and to devise new strategies for reducing this risk.
- To devise credible rules and strategies for sustainable public debt management appropriate to the institutional and demographic characteristics of the EU/euro area.
- To provide detailed institutional proposals for optimal fiscal risk-sharing among EMU member states, subject to the constraint that participation cannot be enforced, and to contrast these proposals with the existing institutional framework (e.g. the ESM).
Related Policy Briefs:
- Lessons from the euro crisis and dealing with the debt overhang
- A European Stability Fund for the EMU
Related ADEMU Perspectives:
- Addressing self-fulfilling sovereign risk: the role of monetary policy by Giancarlo Corsetti
- On the sovereign debt crisis in Europe, by Pedro Teles
Related Working Papers:
A total of 47 ADEMU Working Papers were related to Work Package 1. The full list with corresponding hyperlinks can be consulted here
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Work Package 2: Stabilization policy in currency unions
Assessment of the short-run stabilizing potential of alternative approaches to conducting fiscal policy in a currency union, so as to improve resilience to macroeconomic shocks
Specific Objectives:
- To determine the most appropriate forms of macroeconomic policy coordination among EU and euro area countries, and to quantify the risks associated with uncoordinated policymaking.
- To provide an empirical assessment of the multipliers associated with active fiscal policy, and to clarify the theoretical channels through which these multipliers work.
- To explore the theoretical channels through which social insurance and labour market policy can serve as automatic stabilising – or destabilising – devices.
Related Policy Briefs:
- A European Unemployment Insurance System
- Macroeconomic stabilisation in heterogeneous societies
- Recessions following expansions: The instability of market economies
- Reassessing tax policies and tax coordination: The case for a tax on automation
- Stimulus packages? Better be persistent!
Related ADEMU Perspectives:
- When HANK met SAM – new models for macroeconomic policy, by Morten Ravn and Vincent Sterk
- On the interaction between fiscal consolidation and migration in Europe, by Jordi Caballé, Guilherme Bandeira and Eugenia Vella
Related Working Papers:
A total of 38 ADEMU Working Papers were related to Work Package 2. The full list with corresponding hyperlinks can be consulted here
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Work Package 3: Macroeconomic and financial imbalances and spillovers
Focus on the macroeconomic and financial interdependencies that are of relevance to reformed institutional governance of the euro area. Attention is placed on two specific categories: international spillovers, particularly those associated with fiscal policy, and macroeconomic and financial imbalances.
Specific Objectives:
- To provide new evidence on the cross-border spillover effects of fiscal and financial shocks in the euro area, to understand exactly how these shocks propagate from one country to another, and to explore the implications of this for the conduct of fiscal policy in EU countries.
- To assess the role of macroeconomic and financial imbalances in the recent crisis, to analyse the existing institutional mechanisms for controlling such imbalances (in particular the SGP, MIP and EIP), and to consider strategies for their effective improvement, including reform of the European banking sector.
Related Policy Briefs:
Related ADEMU Perspectives:
- A broad view on narrow banking, by Hugo Rodríguez Mendizábal
- Why household debt makes economies prone to crises of confidence, by Thomas Hintermaier and Winfried Koeniger
- Macro-Prudential Regulation of the Leverage Ratio, by Radim Bohacek
Related Working Papers:
A total of 23 ADEMU Working Papers were related to Work Package 3. The full list with corresponding hyperlinks can be consulted here
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Work Package 4: Policy Implementation
Assess the practical hurdles associated with implementing institutional reforms for the better management of fiscal policy within the EU, with a particular focus on the legal, political and behavioural constraints that the current EMU fiscal institutional structure – and, in particular, the alternative ADEMU proposals – may face.
Specific Objectives:
- To identify the legal and constitutional challenges posed at both a European and national level by recent institutional innovations (including the Fiscal Compact, ESM Treaty and SSM), and to identify similar challenges and potential loopholes associated with the proposals made as part of the ADEMU project.
- To explore relevant political economy concerns associated with the fiscal and financial governance of EMU.
- To examine experimentally the viability of specific theoretical models and policy proposals considered under the ADEMU project.
Related Policy Briefs
- The political economy of policy implementation
- The European Stability Mechanism: The path to reform
- A new fiscal and monetary framework for the EMU? The EU presidents’ roadmap in 2018
Related ADEMU Perspectives:
- EU – the 3 1/2 solution, by Ramon Marimon
- Announced and prophesied: proposals to strengthen Europe’s institutional set-up, by René Smits
- Strengthening the European Union with limited political capital, by Jean-Pierre Danthine
- Timid steps to deepening economic and monetary union, by Giorgio Monti
- The EMU after the euro crisis: Insights from a new eBook – Findings and proposals from the Horizon 2020 ADEMU project, by Ramon Marimon and Thomas F. Cooley
Related Working Papers:
A total of 25 ADEMU Working Papers were related to Work Package 4. The full list with corresponding hyperlinks can be consulted here