Fiscal Union, Monetary Policy Normalization and Populism in the Eurozone

Abstract

This article studies the different scenarios for the fiscal union in the Eurozone beyond 2019. It explains the different alternatives that the literature has explored to ensure fiscal transfers within Eurozone states as well as for common debt issuance. It also describes the role that monetary policy has played as a backstop for sovereign defaults and highlights the limits that inflation and an anti-euro backlash impose on public debt sustainability.