The U.S. experience shows that union-wide fiscal policies, targeted transfers and lower tax rates may help to stimulate growth at the state and national level

The 2008 Great Recession and slow recovery have created a new interest in a broader fiscal union for the EU. Drawing on the U.S. experience from 1973-2009, Robert P. Inman identifies three key lessons for creating efficient macroeconomic policy in a fiscal union: that state level fiscal policies have spillover effects; central government must pick the most cost effective stimulus policies; and that economic efficiency does not always equate with political feasibility. His findings are particular relevant to the challenge of creating effective stimulus plans and broader growth.