Partial Fiscalization: Some Lessons on Europe's Unfinished Business

Michael D. Bordo, Harold James

NBER Working Paper No. 23220
Issued in March 2017
NBER Program(s):Development of the American Economy, Monetary Economics

The recent Eurozone crisis of 2010-2013 has brought to the fore the argument that a successful monetary union needs to be combined with a fiscal union. The history of the U.S. monetary/fiscal union is often given as a template for Europe. In this paper we describe how the push towards creation of the American fiscal union was long and arduous—it took from 1790 to the mid 1930s. In the European case ,unlike the U.S. story, there is strong opposition to creating a fiscal union because members fear the loss of sovereignty that is entailed.

As a compromise between the status quo and a U.S. style fiscal union we highlight a series of measures which amount to partial fiscalization. These include: a banking union; a tax union; a capital markets union; a social security union; an energy union; and a military union. These fiscalizations can be viewed as a variety of insurance mechanisms in which different risks for different participants are covered. Each taken by itself may produce substantial objections from those who fear that someone else’s risks are being covered at their expense. The answer to such objections may be to think not in terms of partial but comprehensive reform packages as are often negotiated in the sphere of international trade.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w23220

Users who downloaded this paper also downloaded* these:
Duflo w23213 The Economist as Plumber
Feldstein w23221 Why is Growth better in the United States than in other Industrial Countries
Kehoe and Pastorino w23235 Financial Markets and Fiscal Unions
Guiso, Sapienza, and Zingales w21121 Monnet's Error?
Spolaore w19122 What is European Integration Really About? A Political Guide for Economists
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us