# 14-008/VI (2014-01-09)

Frank A.G. den Butter, VU University Amsterdam, The Netherlands; Mathieu L.L. Segers, Utrecht University, Utrecht, The Netherlands
history of EMU, Kronungstheorie, optimal currency area, policy coordination, contagion, EPU, social preferences, EMU’s future
JEL codes:
E61, F55, G15, H77, N14

Which ways and means are available for the macroeconomic and fiscal coordination and/or integration within the EMU-framework? Which are the pros and cons of these scenarios? This paper combines economic theory, empirical analysis and insights regarding EMU’s institutional history in order to come to a compromise proposal for an EMU between nationalism and federalism. We take the present status quo acts as a starting point. We describe the tension between the arguments in economic theory on policy coordination and the way contagion can be avoided. In addition we assess the practical political implementation of these arguments. We sketch concrete options for a ‘deepening of economic coordination’ in the EMU, as announced by Van Rompuy in his 2013 London speech, without moving to a full-fledged federalist EPU.