European Fiscal Policy – Lecture 2 SWS

Prof. Dr. Friedrich Heinemann
ZEW Mannheim and Universität Heidelberg
Email: friedrich.heinemann@zew.de

Contents:
The lecture deals with issues of European fiscal policy. It covers both the EU as a fiscal player (EU budget) and the European coordination of national fiscal policies. The lecture also reflects the experience and European fiscal innovations in the context the Corona pandemic and, recently, for defence funding.

Teaching language: English

Dates:
Monday, 5 May 2025, 9:00 – 15:00
Tuesday, 6. May 2025, 9:00 – 15:00
Monday, 23 June 2025, 9:00 – 15:00
Tuesday, 24 June 2025, 9:00 – 15:00

If necessary, there will be a few additional zoom lectures – dates will be agreed upon in presence sessions.
Place:

Hörsaal STA 2, Am Stadtgraben 9

Structure

INTRODUCTION

1. Survey on the history and institutions of the European Union

THE EU BUDGET

2. The EU budget and the multi-annual financial framework: Institutions
3. The dominating spending policies: Common Agricultural Policy and Cohesion Policy
4. The normative view: The theory of fiscal federalism and its message for the division of tasks between EU and member countries
5. The positive view: The political economy of European integratoin

COORDINATION OF NATIONAL FISCAL POLICY WITHIN EMU

6. Theory of optimum currency areas and fiscal policy
7. Empirics of optimum currency areas and stabilizing effects of fiscal equalization schemes
8. Empirics: Sustainability of European public debt
9. European fiscal innovations and the future of the EU’s fiscal constitution

Examination

The course assessment is based on a written examination.

Literature

Baldwin, Richard and Charles Wyplosz, The Economics of European Integration, 7th edition, New York: McGraw-Hill, 2022 (MAIN READING).
De Grauwe, Paul, Economics of Monetary Union, 14th edition, Oxford: Oxford University Press, 2023.
Havlik, Annika, Heinemann, Friedrich, Helbig, Samuel, and Nover, Justus (2022), Dispelling the Shadow of Fiscal Dominance? Fiscal and Monetary Announcement Effects for Euro Area Sovereign Spreads in the Corona Pandemic, Journal of International Money and Finance, 122: 102578.

Heinemann, Friedrich (2021), The Political Economy of Euro Area Sovereign Debt Restructuring. Constitutional Political Economy, 32: 502-522.

Heinemann, Friedrich (2024). Die Schuldenfinanzierung von NextGenerationEU: Gekommen, um zu bleiben? integration. 47(4): 294-312.