Whereas the United States federal budget smooths close to 10% of economic shocks, in Europe this mechanism is non-existent. The absence of effective macroeconomic policy coordination mechanisms in the euro area is exacerbated when monetary policy rubs up against its effective interest rate limits. This circumstance might be more frequent in future if we move into a setting of persistent low rates. Further, it is in this context that the effectiveness of fiscal policy may prove greater. 2  See the welcome address “The EMU at 20: from divergence to resilience”, for the Third Annual Banco de España Research Conference, available at: https://www.bde.es/f/webbde/GAP/Secciones/SalaPrensa/IntervencionesPublicas/Gobernador/Arc/Fic/hdc160919.pdf and "The European economic policy response to a scenario of lower growth and inflation“ for the closing address of the La Granda Summer Courses. Available at: https://www.bde.es/f/webbde/GAP/Secciones/SalaPrensa/IntervencionesPublicas/Gobernador/Arc/Fic/hdc310819.pdf  6  There is a pressing need to create some type of common insurance instrument for the euro area. That would help adverse (symmetrical) shocks at the aggregate level or the idiosyncratic (asymmetrical) shocks of certain countries to be absorbed. The dual objective would be to smooth the effects on individual countries and safeguard the stability of the euro area as a whole. National policy should address the structural shortcomings that hamper productivity gains and the generation and harnessing of investment opportunities in the euro area. At the same time, measures should be introduced so that all citizens may share the benefits stemming from the European project.

This is why I particularly want to thank Emilio Ontiveros for his dedication, not only in today’s book, to popularising these subjects among those not necessarily expert in the matter. b. Re-designing national policies Yet to attain their maximum effectiveness, improvements in global governance should be matched by national economic policies conducive to ensuring the benefits of globalisation reach all citizens. Indeed, while globalisation has general equilibrium aggregate effects that are admittedly positive, it may also have an adverse impact – as Professor Ontiveros states in his latest work – on specific sectors and groups. It is important to attempt to minimise these effects. Improvements in education and active employment policies providing for the readier redeployment of the unemployed are an essential element in this challenge. The impact of population ageing should also be prioritised by the authorities. Specifically, social insurance systems will have to progressively adapt so as to make sufficiency and intergenerational equity compatible, and for the sake of their own financial sustainability. Broadly, in the setting described, the greatest challenge facing public policies is the proper selection of instruments that may effectively attain the goals set and minimise the potential adverse effects. In this respect, public policies designed on the basis of the evidence available on their effects coupled with arrangements to regularly assess these policies will be crucial. Further, many national policies should be designed with international coordination mechanisms, if they are truly to be effective.