The European debt crisis has given new impetus to the debate on economic policy coordination. In economic literature, the need for coordination has long been denied based on the view that fiscal, wage and monetary policy actors should work independently. However, the high and persistent degree of macroeconomic disparity within the EU and the absence of an optimum currency area has led to new calls for examining policy coordination.
This book adopts an institutional perspective, exploring the incentives for policymakers that result from coordination mechanisms in the fields of fiscal, monetary and wage policy. Based on the concept of externalities, the work examines cross-border spillovers (e.g. induced by fiscal policy) and cross-policy spillovers (e.g. between fiscal and monetary policies), illuminating how they have empirically changed over time and how they have been addressed by policymakers. Steinbach introduces a useful classification scheme that distinguishes between vertical and horizontal coordination as well as between cross-border and cross-policy coordination. The author discusses farther-reaching forms of fiscal coordination (e.g. debt limits, insolvency proceedings, Eurobonds) with special attention to how principals of state organization affect their viability. Federal states and Bundesstaaten differ in the incentives they offer for debt accumulation – and thus in their suitability for fiscal coordination.
“In conclusion, despite these caveats, the book is one of the best works on macroeconomic policy coordination in Europe available at the moment. It belongs on the bookshelf of every scholar of European Monetary Integration.“ Sebastian Dullien, Professor for International Economics at the HTW Berlin – University of Applied Sciences
Book reviews: Concepción GarcÃa-Iglesias, The Journal of Economic History, Vol. 75, No. 4, 2015, 1266-1269; Ulrich Oberndorfer, The European Journal of Comparative Economics, Vol. 12, No. 1, 71-74, 2015; Sebastian Dullien, Public Choice, 389-391, 2015; Pierre Schlosser, Journal of Common Market Studies, Vol. 53, No. 6, 1392-3, 2015
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