The search for solutions to the euro crisis is based on a partial diagnosis that overemphasises the lack of enforcement of existing fiscal rules. Europe's leaders should rather address the euro area's inherent weaknesses revealed by the crisis. At the core of euro-area vulnerability is an...

This paper takes stock of the academic and policy discussions on the fiscal institutions of EMU, confronts the framework in place with what is known of the desirable properties of fiscal policy in a monetary union, and discusses possible improvements. We start with a discussion of three...