by Michael D. Bordo, Agnieszka Markiewicz, Lars Jonung - #17380 (DAE ME)
The recent financial crisis 2007-2009 was the longest and the deepest
recession since the Great Depression of 1930. The crisis that
originated in subprime mortgage markets was spread and amplified
through globalised financial markets and resulted in severe debt
crises in several European countries in 2010 and 2011. Events
revealed that the European Union had insufficient means to halt the
spiral of European debt crisis. In particular, no pan-European
fiscal mechanism to face a global crisis is available at present.
The aim of this study is to identify the characteristics of a robust
common fiscal policy framework that could have alleviated the
consequences of the recent crisis. This is done by using the
political and fiscal history of five federal states; Argentina,
Brazil, Canada, Germany and the United States.