Eurozone’s fiscal union: Lessons from US..

I have highlighted this buildup of US fiscal union in other posts as well. Many authors have written on it.

Harold James and Hans-Werner Sinn simplify the lessons further:

The choice of the fiscal mechanism to service a federalised debt potentially raises deeply divisive issues about the distributive effects of the tax or tariff on the constituent states. It requires a well-constitutionalised system of restraint on fiscal behaviour, both at the federal level and at that of individual states. In particular, a commitment not to renew the assumption of state debts is a condition for stable financial and political development of the union.

Nice read. Harold James has written┬ásome nice pieces on this issue of political union in Europe recently…

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