21. Europe and the United States: On the Fiscal Brink?
- Author:
- Jagadeesh Gokhale and Erin Partin
- Publication Date:
- 04-2013
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- What are the implications of Europe's economic troubles for America? Several EU economies now face deep private and sovereign debt overhangs-a situation not unlike that in the United States, which also faces its own challenges with fiscal policy. How do the economic conditions in America and the EU compare in the short and longer terms? This article provides an overview of key indicators that summarize and help to project the two regions' economic prospects. It should be noted at the outset, however, that economic conditions and policies in the two regions differ in substantive ways. As in the United States, most European economies-members of the European Monetary Union (EMU)-now participate in a single currency (euro) system operated by the European Central Bank-the counterpart of the U.S. Federal Reserve System. However, the EU lacks a single central fiscal authority that operates a significant cross-nation transfer system. Having surrendered authority over monetary policy and, by the definition of a single currency, exchange rate policy, EMU member nations must depend on national fiscal policies to exert stewardship over their economies.
- Political Geography:
- United States, America, and Europe