Proposal for a Stabilisation Fund for the EMU
CEPS Working Documents No. 385
15 Pages Posted: 6 Nov 2013
Date Written: October 14, 2013
This paper argues that it should be possible to complement Europe’s Economic and Monetary Union with an insurance-type shock absorption mechanism to increase the resilience of member countries to economic shocks and reduce output volatility. Such a mechanism would neither require the establishment of a central authority, nor would it lead to permanent transfers between countries. For this mechanism to become a reality, however, it would be necessary to overcome certain technical problems linked to the difficulty of anticipating correctly the position of an economy in the business cycle.
Keywords: Economic and Monetary Union, EMU, stabilisation fund
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