Agnès Bénassy-Quéré, Beatrice Weder di Mauro, 26 May 2020

After a period of hesitation, governments in Europe have reacted forcefully to the Covid-19 pandemic with various strategies combining social distancing, testing/quarantining, and lockdowns. During a pandemic, however, coordination is key and repairing corporate balance sheet and the single market, as well as economic recovery constitute common goods. This column takes stock of the progress on addressing the crisis on the three axes of European-level support – monetary, banking and fiscal policy. The EU Recovery plan that is taking shape looks promising and could represent a significant sign of European solidarity and unity. 

Massimo Bordignon, Guido Tabellini, 13 May 2020

The subsidiarity principle implies that the EU should do what member countries cannot do by themselves. In the context of the current crisis, this implies issuing very long-term debt. This column argues that this could be achieved by endowing the new EU Recovery Fund with genuinely own EU sources of revenue. Providing the EU with revenue from EU own tax bases would also improve the quality of EU expenditures, and could pave the way to the creation of a euro area fiscal capacity.

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