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Assessing Next Generation EU

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  • Codogno, Lorenzo
  • van den Noord, Paul

Abstract

The unprecedented fiscal package adopted by the European Council in the summer of 2020 ―dubbed Next Generation EU―is vital for the recovery of the euro area from the pandemic shock. However, there are risks that targets will not be met and that it may prove difficult to muster the same degree of European ‘solidarity’ in the future. Computations with a stylised macroeconomic model indicate that an alternative approach, with ex ante risk sharing through the creation of a Eurobond and permanent fiscal capacity at the centre, would be at least as powerful, yet it would be more sustainable, automatic and timely.

Suggested Citation

  • Codogno, Lorenzo & van den Noord, Paul, 2021. "Assessing Next Generation EU," LSE Research Online Documents on Economics 124232, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:124232
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    File URL: http://eprints.lse.ac.uk/124232/
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    References listed on IDEAS

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    More about this item

    Keywords

    fiscal policy; business fluctuations; safe sovereign assests; fiscal capacity;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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