Europe must go big in its macroeconomic response to COVID-19

With more citizens infected than in China, the European Union (EU) is now the world’s COVID-19 epicenter. At the same time, by restricting movement more forcefully, Europe is proving that democracies, too, can take many of the measures China had taken. Targeted and free testing widely available across the EU is part of the reason why Europe has a high number of new confirmed COVID-19 cases. European welfare states also generally provide paid sick leave, and European children do not need to rely on their shuttered schools for their main daily meal.

At the same time, Europe, and noticeably the euro area, is finding it politically challenging to implement timely and comprehensive macroeconomic stabilization measures in a crisis, mainly because of its incomplete institutional framework with no centralized fiscal authority. Will the COVID-19 crisis be any different?

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Πηγή: piie.com