European countries diverge economically – not only by growth rates, but also in terms of the underlying structure of the economy. Philipp Heimberger and Jakob Kapeller argue that a policy mix of targeted public investment, wage-growth policies and financial sector regulation can lead to sustainable economic convergence among the EU’s Member States. These policies should specifically target countries of the “core”, the “periphery”, of Eastern Europe, and strongly financialised countries.
In order to make the European Monetary Union work, a stabilization mechanism is needed. The solution Joerg Bibow has been proposing for years is to create a “Euro Treasury”: a minimalist fiscal union run by the Eurozone member states aimed at funding public investment spending by issuing common debt securities. In his latest working paper he discusses in detail how to design it.