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Richmond Federal Reserve publication Regional Focus

The print edition of The Fedral Reserve Bank of Richmond’s publication Regional Focus (third quarter 2010 edition) has several articles that might be useful resources if you are asking general questions about under funded public employee pensions or fiscal problems/debt issue in the EU. That is, the articles are good over views:

Fuzzy Math, public pensions are underfunded - How bad is it? http://www.richmondfed.org/publications/research/region _focus/2010/q3/pdf/cover_story.pdf? WT.si_n=Search&WT.si_x=3

Continental Divide http://www.richmondfed.org/publications/research/region _focus/2010/q3/pdf/feature1.pdf? WT.si_n=Search&WT.si_x=3

Note: the second article is interesting in that the sovereign debt of the separate countries was not correctly addressed at the time that the common Euro currency was developed/deployed. That in effect monetary policy was addressed but sovereign debt issue/fiscal policy was glossed over.

“For all the benefits of monetary union, however, the details still proved challenging. The biggest concern for most economists, it would appear, was the divorcing of monetary and fiscal policies — although the EMU established a single currency and thus a single monetary policy, there would be significantly less coordination in terms of member-state spending. Although convergence criteria were put into place and eventually codified with the Stability and Growth Pact, how such rules would be enforced remained unclear.

The sovereign debt crisis may provide the necessary spark for EMU members to discuss fiscal coordination policies in earnest, but any attempts to centralize authority likely will be met with resistance. “It will be difficult to achieve currency stability without fiscal harmonization,” says Calvo. “They have been talking about doing this from the beginning, but I don’t know how they are going to make it happen.” Ferguson touched on a similar note. “What the Greek crisis has belatedly revealed is that such fiscal centralization is the necessary corollary of a monetary union,” he writes, arguing that the choices before the EMU are much more fundamental than simply whether to bail out countries facing significant fiscal problems."