Marco Buti and Marcello Messori argue that the forceful policy response of the EU and its member states to the COVID Pandemic, and in particular the move to a more structured 'vertical' coordination between national and EU fiscal policies, has led to a more balanced euro area policy mix, which has allowed the rapid absorption of the euro area's dramatic recession and favoured a strong bouncing back of its economy in the current year. Moving forward, the authors argue that transitioning to a structured vertical coordination between national and EU budgets would help ensure an adequate fiscal stance for the future, and avoid the overburdening of the single monetary policy.
