Reforming the eurozone: Assessment of the reform package by the European commission – Treating symptoms or root causes?

Abstract

The paper studies the reform package proposed by the European Commission on 6 December 2017. First, institutional and economic implications of the reform proposal are analysed. The paper finds that some proposals are beyond the present Treaty provisions. For instance, the proposal of a fiscal capacity does not tackle the economic root causes without a supranational transfer mechanism. In fact, the proposed budget neutrality over the medium-term is unfeasible due to cross-country heterogeneity in the Eurozone. At the end, the paper develops policy conclusions.