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Socioeconomics and Fiscal Policy
Current Events Article Review
One of the more interesting discussions occurring relative to the purpose and effective use of fiscal policy in today's macroeconomic environment is arguably occurring inside the European Union (EU). There is a high level debate that is ongoing about the future of the EU after various economic crises that have emerged such in Greece, most notably, but also in other economies such as Spain. Some argue that the since the European Union is made up of independent nations with their own elected governments, their problems are going to be essentially local and they will need local solutions that any policies from a centralized financial system that sets fiscal policies for all the EU nations could ever possibly address (Debating Europe, N.d.).
There are many ideological objections to the fiscal union that is being formed that lie outside its potential effectiveness, such as the issue of taxation without representation, however such arguments should be overlooked and the focus should merely the costs of benefits of collective fiscal policy for European nations. In a recent press release published by the European Central Bank, Benoit Coeure, an executive board member...
He first acknowledges some uncertainty about the role of the Central Bank of Europe (EBC) in the future as a response to many of the EU citizens voicing doubt of this institution and their loyalty to the European Union in general. Also, the EBC fully acknowledges its need to strengthen its legitimacy among the population especially by adopting more democratically accountable oversight from the member nations.
Despite all the criticisms that are appear in regards to the role of the ECB in Europe, it is clear that the European Union has many potential macroeconomic advantages to be gained through collective action that the ECB can administer. One of the primary advantages is that the ECB can craft policies that help maintain a level of price stability that can benefit the union in a multitude of different ways such as fostering trade, foreign investment, and the ability to maintain a long-term growth strategy among others. However, one the problems that the ECB faces in responding to some of the immediate financial needs that are present in…
References
Coeure, B. (2016, March 21). The future of the euro area. Retrieved from European Central Bank: https://www.ecb.europa.eu/press/key/date/2016/html/sp160321.en.html
Debating Europe. (N.d.). Arguments for and against fiscal union. Retrieved from Debating Europe: http://www.debatingeurope.eu/focus/infobox-arguments-for-and-against-fiscal-union/
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