The Metamorphosis of the European Economic Constitution
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The Metamorphosis of the European Economic Constitution

Edited by Herwig C.H. Hofmann, Katerina Pantazatou and Giovanni Zaccaroni

Demonstrating the ways in which the micro and macro-economic constitutions of Europe have reacted to legal measures enacted to counter the economic crisis of the past decade, this innovative book takes an interdisciplinary approach in its attempt to understand and portray the metamorphosis of the European Economic Constitution. It contains contributions from leading scholars and experts in European economic law, discussing the challenges, solutions found, problems arising and possible approaches to embed the economic constitution in the broader constitutional framework of the EU.
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Chapter 10: Assessing the post-crisis European Economic Constitution: the fiscal perspective

Katerina Pantazatou and Ioannis G. Asimakopoulos

Abstract

The chapter begins with a description of the imperfect character of the EMU, one of the main components of the European Economic Constitution, and the crisis-induced mechanisms to address any ensuing external, asymmetrical shocks. In absence of monetary policy instruments at the national level, fiscal policies can become overwhelmed if country-specific shocks are very large and not well catered for by the shock-absorbing capacity of the economy and the financial sector. Hence, risk-sharing in the EMU takes place through two channels: the market channel and the fiscal channel. In particular, the second section examines the preventive and corrective fiscal rules, the third elaborates on the role that the European Stability Mechanism and the European Central Bank play in providing fiscal relief to Member States in need, and the fourth section analyses how the Banking Union is aimed to absorb fiscal imbalances rather than reinforce them. We then conclude.

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