Integration through crises? A quantitative assessment of the effect of the Eurocrisis on preferences for fiscal integration

The Eurocrisis has generated a wave of new institutions; yet, the agenda for the reform of the EMU has no lack of measures waiting for member states approval. During the crisis, however, a cooling of the public opinion in favour of more integration has been observed. This paper seeks to clarify if and to what extent the Eurocrisis has affected preferences for further fiscal integration in a multilevel setting, looking into individual determinants as well as regional and national aggregates through a country-level panel dataset built on ten waves of Eurobarometer and two different forms of fiscal integration: Eurobonds and strengthened economic governance. To measure the effect of the crisis, we use both standard economic variables such as unemployment and growth rate, and two indexes of crisis intensity built using principal components analysis. In general, we find evidence supporting the view that economic/financial distress is correlated with higher preferences for fiscal integration. However, this effect is moderate by two elements: first, lack of synchronization between the financial/economic cycles implies that only particularly acute EU-wide crises could succeed in shaping a generalized preference for further integration. Second, certain groups of countries have preferences for different forms of fiscal integration, with Eurobonds preferred by southern countries, while strengthened fiscal governance preferred by northern countries.