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The Never-Ending Quest for the European Fiscal Policy’s Objectives: Stability vs. Convergence or Stability and Convergence?

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  • Carlo Klein

Abstract

The aim of this paper is to analyse the permanent struggle to define European fiscal policy objectives, hence to define the corresponding structure of such a policy. To discuss the objectives of fiscal policies in the European context our starting point will be the idea that politics has to define clear objectives, then economic policies, fiscal policies included, should be designed to attain the fixed objectives. In the European context, the Economic and Monetary Union (EMU)’s main objectives have been restated in 2015: “balanced economic growth and price stability, a competitive social market economy, aiming at full employment and social progress†for all member states. Our conclusion, based on these objectives, will be that the EMU needs a fiscal policy as well to cope with asymmetric shocks as to foster real convergence among member states. Therefore, a clearer presentation of the corresponding policies with the expected outcomes on the member state level has to be added. This has to be achieved through an improved communication policy to convince European citizens that the European integration is not just about maintaining peace in Europe but that a real improvement in living conditions can be achieved. (JEL E61, E62, F15, F55)

Suggested Citation

  • Carlo Klein, 2021. "The Never-Ending Quest for the European Fiscal Policy’s Objectives: Stability vs. Convergence or Stability and Convergence?," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 7(1), pages 41-66, January.
    • Handle: RePEc:ate:journl:ajbev7i1-2
    DOI: 10.30958/ajbe.7-7-2
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    1. Gregory T. Papanikos, 2022. "Greece in the Eurozone: An Evaluation of the First Two Decades," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 8(2), pages 177-192, April.

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    More about this item

    Keywords

    Economic and Monetary Union; Optimum Currency Area; Real Convergence of European Economies; Common Fiscal Policy; Interventionist Supply Side Policies;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F15 - International Economics - - Trade - - - Economic Integration
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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