ADEMU (A Dynamic Economic and Monetary Union) was part of the Horizon 2020 work programme topic Resilient and sustainable economic and monetary union in Europe (EURO-1-2014). The primary focus of the project was on the dimension The impact of macroeconomic and social imbalances on economic stability. The total grant received was EUR 2.500.000.

In response to the European debt crisis and associated deep recession, a number of important steps have been taken towards redesigning the institutional architecture of the European monetary union, based on the roadmap outlined in the Van Rompuy Report (2012). But these institutional innovations – in particular the ‘fiscal compact’ of the European Stability Mechanism, the Single Supervisory Mechanism and the Single Resolution Mechanism – retained relatively weak theoretical foundations when the project was launched and throughout its lifecycle. In particular, there was a noticeable gap between policy-oriented analyses of the precise EU challenges, and the major developments in dynamic macroeconomic theory of the past three decades.

ADEMU brought together eight research groups from leading European institutions with the aim of closing this gap. It studied the overall monetary and fiscal structure of the EU and the euro area, and the mechanisms of fiscal policy coordination among member states, with specific focus on:

  1. Ensuring the long-term sustainability of EMU, addressing issues such as debt overhang, fiscal consolidation, public debt management, risk-sharing within the union, and crisis management mechanisms;
  2. Building resilience to economic shocks, with special emphasis on the coordination of fiscal policies, fiscal multipliers and labor market risks; and
  3. Managing interdependence in the euro area, analyzing both fiscal and financial spillovers and the effects of macroeconomic imbalances on financial and money markets, and, to confront these issues, new forms of banking regulation and monetary policy.

ADEMU: original structure (Work Packages) and main results

ADEMU was originally conceived in 2014, in response to the Horizon 2020 Call for research on “Overcoming the Crisis: New Ideas, Strategies and Governance Structures for Europe”. The proposal was organized into six work packages: Work Package 1, 2, 3 and 4 focused on the reassessment of the fiscal and monetary framework of the EMU, while Work Package 5 and 6 were aimed at fulfilling the Communication and the Coordination purposes.

A detailed description of the project structure, linked to the final results, can be found here.

The mid-term narrative of the project

When the project reached its mid-term the Steering and Executive Committee, as well as the Advisory Committee realized that a reflection on the project contents was needed in order to take into account the crucial changes that had occurred in Europe since its initial conception: migration, security, euro-skeptic populism and, more importantly, Brexit, the first historical reversal of the European integration process. In such context, the questions regarding the EU, the EA and the EMU design had become even more fundamental and the role of ADEMU of assessing and providing and empirical and theoretical foundation for the different development paths of EMU resulted reinforced.

The ADEMU Narrative was the result of such reflection: a summary of the main topics of the ADEMU agenda, both as a narrative, and a guide, to some of the working papers and activities of the first two years of the project, leading to further and more appropriate discussions in preparation for the final year of the project. It can be read here.

The Final Report of the Advisory Committee

The Advisory Committee of the ADEMU project supervised the work of the research team and provided a number of pivotal suggestions over the course of the three years. At the end of the project a final report was issued, summarizing the highlights as well as providing an overall evaluation of the project. It can be read here.