Next Generation EU:can we do better?

The unprecedented fiscal package adopted by the European Council in 2020 – known as Next Generation EU – is vital for the recovery of the euro area economy from the pandemic. Thus, it is very much welcome. However, our estimates indicate that creating a Eurobond and permanent fiscal capacity at the centre would be more powerful to mitigate the impact of the crisis. It would provide a more timely and effective response, would help the transmission of monetary policy and alleviate the burden of countercyclical policies from national authorities.