Why macro-fiscal policy should be coordinated in economic unions?

EZ crisis is leading scholars to look at other important aspects of an economic union.

In this voxeu column, Gerald Carlino, Robert Inman say we need to look at local govt. expenditures as well and coordinate them:

How should macro-fiscal policy be coordinated in economic unions? This column argues that the received wisdom has it right, and presents new empirical evidence suggesting that there are important positive spillovers between an economic union’s lower-tier governments in the management of macro-stabilisation policies. We should pursue coordinated policies. Finding programmes and institutions that can best facilitate this coordination is the important next step, both for new and established economic unions.

 

 

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