Three Sources of Legitimacy for European Fiscal Policy

Fiscal policy has remained under the authority of national governments in “Euroland,” while monetary policy is unifi ed in the hands of the European Central Bank. This arrangement does not produce optimal results. This article looks at the normative foundations of fiscal policy in the European Union, by mapping the allocative function, stabilization, and redistribution policies onto three models of legitimacy: the problem-solving European Union, the communitarian model, and the European Republic.