Macroeconomic Stability and Regional Inequality in Europe: A Survey

This survey examines the complex relationship between macroeconomic stability and regional inequality in Europe, focusing on the EU-27 countries plus Norway, Switzerland, and Iceland. Despite decades of national-level stability—low inflation, sound public finances, and moderate output volatility—territorial disparities persist, and in some cases have widened. We review the theoretical mechanisms linking macroeconomic outcomes to regional divergence, including inflation dispersion, output volatility, asymmetric labor market shocks, and spatial spillovers. Empirically, we synthesize evidence from cross-country panels, quasi-experimental designs, and spatial econometric models, highlighting the role of fiscal, cohesion, and monetary policies. We identify critical gaps in the literature, particularly for the post-2020 period, finer spatial scales (NUTS3), and integrated macro–regional modeling, and propose a research agenda addressing new shocks, including NGEU, the energy crisis, green transition, and artificial intelligence. Finally, we discuss policy implications, emphasizing the need for a “place-based” macroeconomic framework that integrates stabilization and territorial cohesion objectives.