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UM E-Theses Collection (澳門大學電子學位論文庫)

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Title

European Union's fiscal policy integration after sovereign debt crisis : necessity, measures and difficulties

English Abstract

As the European Union (EU) becoming the biggest economy and the largest trading group in the world, the sovereign debt crisis started in the euro area has impacted on global economic stability. Except for external cause such as the difficult economic environment, structural defects of the euro area are the fundamental reason for this crisis. Because of the centralized monetary policy conducted by European Central Bank (ECB) targeting at price stability, member states can only use fiscal tools to deal with economic shocks. With other domestic demands and lack of sufficient supervision, public debt levels of many member states have passed the standard level. It is why the crisis started in Greece so quickly spread among euro zone countries. As a result, it is crucial for the EU to coordinate fiscal policies between member states and promote further integration in this area. Specific measures include strengthening fiscal discipline and financial supervision, especially at the EU level, to prepare itself for building a supranational supervision body with more authorities. Another measure that has been constantly talked about is common Eurobond, sovereign bond that is jointly guaranteed by euro zone member states together. Possible benefits include lower financing cost and increasing liquidity of the market. However, because of the moral hazard and demands for centralized budget decision and other system requirements, many countries including Germany are strongly against it. Financial transaction tax (FTT) has also been considered as a useful tool to stabilize the market and increase fiscal power of the EU. It could be seen as a step that member states start to transfer some of their taxation right to the European level. This process of fiscal policy integration is faced with a series of obstacles. It is hard to demand member states to sacrifice their own interest for the EU when the concept of EU identity is not deep rooted. Objective differences such as economic competitiveness and social preferences also make it hard to coordinate. Fiscal rights such as taxation are of the core interests of a state, which means it more difficult than monetary policy to be transferred to the EU level. In this long and demanding process of fiscal policy integration, Germany’s attitude is crucial regarding to the future path of the EU. No discussion could be done without taking that into consideration.

Issue date

2016.

Author

Wang, Zhe

Faculty

Faculty of Social Sciences and Humanities

Department

Department of Government and Public Administration

Degree

M.A.

Subject

Fiscal policy -- European Union countries

European Union countries -- Economic policy

Financial crises -- European Union countries

Supervisor

Song Weiqing

Files In This Item

Full-text (Intranet only)

Location
1/F Zone C
Library URL
991001577759706306