Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/219709 
Authors: 
Year of Publication: 
2015
Series/Report no.: 
Institute of Economic Research Working Papers No. 93/2015
Publisher: 
Institute of Economic Research (IER), Toruń
Abstract: 
The European Union has recently implemented one of the biggest reform packages in its history. Developed solutions are designed to (1) strengthen EU's resilience to shocks and (2) improve its shock absorption capabilities. It seems that so far stress was mainly placed on the first objective. Among the reforms, which satisfied the second objective, the European Stability Mechanism (ESM) plays a key role. However, this is not the only solution. The European Union is also developing a fiscal capacity for the euro area. On the base of a subject literature study, I have developed a model with boundary conditions of fiscal federalism, which then was compared to macroeconomic data for the EU. Results of my findings show that the European Union, and especially the euro area, share a lot of characteristics typical for fiscal federalism. From this point of view, a budget for the euro area seems to be the best form of fiscal capacity. However, it could bring further fragmentation of economic integration process in the EU which probably would not positively contribute towards the stability in the political sphere.
Subjects: 
Fiscal capacity
Fiscal federalism
European Union
Euro area
EU Budget
JEL: 
E60
E61
E62
E63
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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