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Corresponding Author:
Nicola Acocella, University La Sapienza, MEMOTEF, Rome, Italy

Fiscal policy and Innovation Led-Growth in Europe. Public Investment and Public Support to Private Investment in Europe

November 19, 2025
JEL classification: E52; E61; E62; H50; O40
Keywords: European Monetary Union; Break up; Many-Speed Union; Exit from EMU; Structural Reforms

Abstract

The EU has been unable to express a cohesive and competitive economic model that adapts to the challenges of globalisation.

Many scholars - both European and non-European, such as: Wolfgang Streeck, sociologist and director emeritus of the Max Planck Institute for the Study of Societies, the French philosopher and economist Jacques Sapir, and, on the other side of the Atlantic, Joseph Stiglitz and Paul Krugman - have long been underlining the need to reform the EU to make it a more dynamic and less bureaucratic actor, who has long denounced the structural crisis of European capitalism and the EU’s inability to adapt to the challenges posed by globalisation.

The role of fiscal policy and innovation-led growth is central also in Europe. In fact, contrary to what has often been said, especially in countries such as Germany, public investment and public support should be given to private investment in Europe. The role of fiscal policy should be central, since it has been shown that this branch of economic policy is effective, contrary to what policymakers thought in many countries. Scholars in Italy and England have, in fact, contributed to demonstrate that, against such eminent scholar as Robert Lucas.

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