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Europe’s Quest for Fiscal Discipline

Author(s): Charles Wyplosz, Graduate Institute of International and Development Studies, Geneva and CEPR

Europe’s Quest for Fiscal Discipline pdf(2 MB) Choose translations of the previous link 

This paper argues that the sovereign debt crisis is the result of a lack of fiscal discipline broadly defined to include adequate banking supervision. The paper argues that Europe has inadvertently adopted the wrong model of collective discipline, because it is centralized while a decentralized model not only better fits the Euro Area makeup but also has a superior track record. It also notes the need for the ECB to accept its role of lender of last resort, which in turn requires the adoption of a full-blown banking union.

(European Economy. Economic Papers 498. April 2013. Brussels. PDF. 52pp. Tab. Bibliogr. Free.)

KC-AI-13-498-EN-N (online)
ISBN 978-92-79-28580-6 (online)
doi: 10.2765/43864 (online)

JEL classification: E58, E61, G28, H53

Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.

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