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One Market One Money; One Market One Budget?
Ognian N. Hishow
EU-Consent EU-Budget Working Paper No. 2
July 2007

The paper discusses the necessity of some form of fiscal federalism in the Eurozone which is expected to remain a non-optimum currency area much longer. In the current economic and monetary union the bundle of shock absorption tools available is too small or too weak. A cycle smoothing central budget is suggested to support fiscal efforts on the national level. Although the size of the proposed budget is much bigger than the current one, it is however not huge if only automatic stabilizer functions are considered. By limiting the expenditure of the center only to shock absorption the political task of implementing a central budget can be solved.

  1. Introduction
  2. On the "European" Government
    1. The Model (I): Fiscal Expansion in the EMU
    2. The Model (II): On the Equilibrium Scope of Fiscal Expansion
  3. On the size of the central budget
  4. Appendix 1: Derivation of
  5. Reference


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