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A Dynamic Economic and Monetary Union

Periodic Reporting for period 2 - ADEMU (A Dynamic Economic and Monetary Union)

Reporting period: 2016-06-01 to 2018-05-31

The successive financial and sovereign debt crises that affected large parts of the world economy between 2008 and 2013, together with the deep recession they brought about, generated a number of new challenges in the design of appropriate macroeconomic policies, especially in the Euro area. In 2012 and 2015, respectively, the Four and the Five Presidents’ Reports had provided a roadmap of how EMU should be completed with five components: Monetary Union, Economic Union, Fiscal Union, Financial Union and Political Union. In 2015, building on this yet incomplete roadmap, the project ADEMU - A Dynamic Economic and Monetary Union – set a three-year plan aimed at reassessing the EMU fiscal and monetary framework, providing insights into how to reform and complete it and developing new theories and applied works. In particular, the project involved eight leading European Universities engaged in the rigorous investigation of risks to the long-run sustainability of EMU, as well as in the design of credible EMU policies and institutions, taking into account the political and legal constraints within the framework of which the EMU project is being developed.
ADEMU research was divided into four main areas of investigation:
1) Long-term sustainability of monetary and fiscal union, in particular the sustainability of sovereign debt, and of union-wide burden-sharing mechanisms.
2) Stabilization policy in currency unions, for the improvement of resilience to macroeconomic shocks.
3) Macroeconomic and financial interdependencies, with a main focus on international spillovers associated with fiscal policies and macroeconomic and financial imbalances.
4) Implementation of institutional reforms for the better management of fiscal policy within the EU, with a particular focus on the legal, political and behavioural constraints that the current and the alternative, future EMU fiscal institutional structures may face.
The ADEMU project produced a vast quantity of research on the long-term sustainability of the EMU: over three years, hundreds of participants have attended 13 conferences,16 workshops, 4 seminars,13 lectures and a summer school in 11 cities across Europe.
Experts from global institutions including the IMF, the EC, the Federal Reserve of the United States, the ESM, the ECB, the European Fiscal Board, national governments and central banks have attended conferences, workshops and seminars and ADEMU’s research has been discussed, analysed and refined at a series of events around Europe, often organized in collaboration with these institutions (e.g. Banco de España, Deutsche Bundesbank, IMF, and the ESM).
ADEMU researchers and associates have produced a total of 139 working papers, all of which are archived in an open access repository, in compliance with the Horizon 2020 rules on open access to scientific publications.
A set of Policy Briefs has also been published in a VoxEu eBook, thus ensuring an accurate and thorough dissemination of the main ADEMU outcomes.
The success of the project is well summarized by the final report of its Advisory Committee: “The accomplishments of the ADEMU project have been many. Importantly the project underscores the critical role of innovative research focused intensely on the underlying issues of the Eurozone and the compelling policy issues they create. (…) It would be impossible to summarize the vast quantity of research and the wealth of ideas that have emerged from the ADEMU project (...). This is research that offers a path forward for the Eurozone and it is impressive in its scope. Our assessment is that the ADEMU project has delivered on its promise”.
The work performed over the course of the ADEMU project can roughly be divided into 4 main categories:
1. Working Papers
2. Workshops and Conferences
3. Policy briefs
4. Others (lectures, seminars, indicators, reports and experimental software)

With regard to the results, the ADEMU project has contributed to the production of a vast quantity of research, linking “the supply of new ideas” and “the demand for reassessing the fiscal and monetary framework of the EMU”. In particular, the research has used, and has further developed, the tools and theories of modern economics and finance, as well as of modern legal research, with three aims:
• to gain a better understanding on how economies, with heterogeneous agents, behave and react to policies in times of crisis and recession – with a focus on European economies through the euro crisis;
• in light of this enhanced understanding, to reassess the current EMU framework and existing proposals for reform – in particular, the Presidents’ Reports and European Commission proposals; and
• to come up with new proposals to strengthen the resilience and competitiveness of the EMU which can be implemented with consensus in the current heterogeneous euro area.
The VoxEU-ADEMU eBook provides an abridged overview of research that has been conducted under the ADEMU project as well as of its findings and proposals. On the other hand, the ADEMU Working Paper Series represent the core of the scientific research of the ADEMU project. The Final Conference of the project, which took place in Florence on May 9-11, provided the opportunity to present and discuss the research contents. The other exploitable results of the project have taken the form of reports, videos and presentations and they will remain accessible even after the conclusion of the project. All of the results of the ADEMU project are available on the website, which has been renewed and made more user-friendly with the specific purpose of making the outcomes of the project more accessible to interested users even after its formal end. The communication team has ensured adequate publicity to the ADEMU research throughout the duration of the project. In particular, every event, as well as the publication of new working papers and policy briefs has been thoroughly documented via the ADEMU website and through targeted email campaigns. Video, pictures and slides from workshops and conferences have been regularly uploaded on the ADEMU website, which has served as a landmark for all the people interested in the ADEMU research.
The results of the ADEMU project have been achieved collectively, through the collaboration and the exchange of high-level academics, PhD and postdoc students and policy makers, and given this multifaceted origin, they can provide a significant impact at different levels: in the academia, for teaching and learning purposes and providing terrain for further research and follow-up studies; at a political level, offering food for thought that can be (and has already been) debated in European and international fora; formulating specific proposals that can be pursued to strengthen the EMU; assessing the legal feasibility of the suggested reforms has also been studied, thus making it easier for policy makers to translate them into action.

In particular, the collaborations with high-level institutions have strengthened the dissemination of the ADEMU agenda and outcomes, reinforcing the likely impact of the overall project. In the coming years the impact of the project will be twofold as the ADEMU research agenda is likely to be further developed and to have a relevant policy and institutional impact, since the discussion on its proposals and underlying ideas has just started.
ADEMU final conference
Group picture of the ADEMU Kick Off Conference, Cambridge
Banner of the ADEMU Kick Off Conference, Cambridge
Professor Ramon Marimon and Joaquin Almunia at the ADEMU Kick Off Conference, Cambridge
ADEMU final results - Magazine
Workshop on Risk Sharing Mechanism for the EU/1
"ADEMU conference at the Bank of Spain: ""How much of a fiscal union for the EMU?"""
ADEMU Lecture at EUI, by Prize Nobel Robert Jr.Lucas
ADEMU final conference
"ADEMU conference at the Bank of Spain: ""How much of a fiscal union for the EMU?"""
Workshop on Risk Sharing Mechanism for the EU/2
"ADEMU conference at the Bank of Spain: ""How much of a fiscal union for the EMU?"""
Workshop on Macroeconomic and Financial Imbalances and Spillovers