The document discusses arguments for fiscal centralization in the European Union based on lessons from other federal states. It argues that having decentralized fiscal policy alongside centralized monetary policy in the EU causes problems with adjustment to economic shocks and freeriding. The authors conclude that the EU should consider enforcing a no-bailout clause, allowing some independence for member states' revenue and spending, a system of fiscal transfers during crises, developing a euro bond market, and maintaining some flexibility.

1. CENTRALIZED FISCAL POLICY

2. Bordo, Jonung & Markiewicz
A fiscal union for the Euro: Some lessons from
History

3. PAPER SET-UP
Overview of the topics at hand
Governance in the EU, and the arguments for fiscal
centralization
Lessons from other Federal states.
concluding remarks

4. AIM OF THE PAPER
Eu is the first monetary union with
monetary policy at a centralized
level and fiscal policy at the
decentralized governmental level.
The authors want to use political
and historical information of other
federal states* to draw lessons for
the EU.
They emphasize the delicacy of
the issue: EU is a union of citizens
and member states at the same
time”
*The other federal states: USA, Canada, Germany, Argentina, Brazil

5. FISCAL CENTRALIZATION
The coexistence of several fiscal policies and one monetary
policy causes 2 main problems:
Blunt adjustment mechanisms to shocks.
Freeriding problems.
nificant, so fiscal policies serve national interests only. And ferrying arises at eq

6. CONCLUSIONS
1. Enforcing of no-bailout clause
2. A degree of revenue and expenditure independence
3. System of fiscal transfers in crisis times.
4. Euro bond market
5. A certain degree of flexibility.

7. PARTS I DID NOT FULLY
UNDERSTAND
Dynamics behind concluding remark #2: “ a degree of
revenue and expenditure independence to account for own
preferences”.