Historical evolution and dynamic mechanism design : the macroeconomics of the EU

Abstract

In this talk, I will start with a short reference to the design of the Max Weber Programme, and to the general interaction between induction vs deduction, between learning and evolution vs policy and institutional design, an interaction to which different social sciences and humanities contribute. I will refer to some contributions that economic theory has made (a short tribute to Robert E. Lucas Jr. and Edward C. Prescott). Then I will enter on the main topic of the lecture: the historical evolution of the EU; in particular, of its 21st Century evolution through crises from an European Union (and euro area) without resilience concerns, to one with a broad range of European public goods, challenges and resilience responsibilities; from a relatively simple fiscal and monetary (Maastricht) framework to the need of a resilient and efficient framework, when "Europe once again must answer the call of history" (EC President von der Leyen’s 2023 State of the Union Address, September 13). I will close with a proposal for a European Stability Fund with a dynamic mechanism design, which, in conjunction with the ECB, can act as a Lender of Last Resort for the EA, and possibly the EU.