The euro area will not have a centralised budget and smoothing of country-specific asymmetric shocks via private financial markets will develop only slowly. Mistrust among the governments has caused rigid, even pro-cyclical fiscal policies. Smoothing mechanisms are absent due to the fear that...

In welfare states, collective saving has declined to a persistently negative level, while reduced fertility and increasing longevity are leading to increasing pension liabilities. Actuarial neutrality across generations is presented as a benchmark for designing pension reforms to meet the...

Output gaps (OG) identify economic cycles and the cyclical and structural components in government budget balances. A new simple method for estimating OGs is presented here. The new results are more transparent than those published by the leading economic policy institutions. - The retroactive...

The conflicting standpoints on reforming the euro are creating more controversies than practical results. Mistrust between the participants led to short-sighted fiscal discipline that has amplified the economic disturbances. Expert analysis on the proposed reforms is often deficient as the...

In this paper, sound public finances under the euro means sustainability in the long term instead of short- and medium-term fiscal discipline. The challenges to sustainability are identified for the four largest euro area member states, and several policy options for sustainability are...

This paper explores how the Stability and Growth Pact may cope with the future costs of population ageing in the European Union. Clearly, population ageing has forced countries to reform their pension systems, and will continue to do so, both by reducing the generosity of pension arrangements...

In this paper, sound public finances under the euro means sustainability in the long term instead of short- and medium-term fiscal discipline. The challenges to sustainability are identified for the four largest euro area member states, and several policy options for sustainability are...

Output gaps (OG) identify economic cycles and the cyclical and structural components in government budget balances. A new simple method for estimating OGs is presented here. The new results are more transparent than those published by the leading economic policy institutions. - The retroactive...

The conflicting standpoints on reforming the euro are creating more controversies than practical results. Mistrust between the participants led to short-sighted fiscal discipline that has amplified the economic disturbances. Expert analysis on the proposed reforms is often deficient as the...