How to Spend 750 Billion Euro? Applying Sacrifice Theory to Determine COVID-19 Compensations in the EU

15 Pages Posted: 8 Jul 2020

See all articles by Alfred Greiner

Alfred Greiner

Bielefeld University - Department of Business Administration and Economics

Benjamin Owusu

Bielefeld University - Department of Business Administration and Economics

Date Written: June 1, 2020

Abstract

In this note we consider an economic union consisting of sovereign national states. An asymmetric shock hits the union and as a result it decides to set up a fund in order to compensate the countries in the union. We show how sacrifice theory can be used to determine the compensation payments for the countries in a way such that the relative damages after compensation are equal across countries. Finally, we apply our results to determine the COVID-19 compensations payments in the EU.

Keywords: public transfers, sacrifice theory, economic union

JEL Classification: H12, H84

Suggested Citation

Greiner, Alfred and Owusu, Benjamin, How to Spend 750 Billion Euro? Applying Sacrifice Theory to Determine COVID-19 Compensations in the EU (June 1, 2020). Bielefeld Working Papers in Economics and Management No. 04-2020 , Available at SSRN: https://ssrn.com/abstract=3634483 or http://dx.doi.org/10.2139/ssrn.3634483

Alfred Greiner (Contact Author)

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
Bielefeld, 33501
Germany
+49 521 106 4859 (Phone)
+49 521 106 67120 (Fax)

HOME PAGE: http://phoenix.wiwi.uni-bielefeld.de/lehrbereiche/vwl/wipol

Benjamin Owusu

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
D-33501 Bielefeld, NRW 33501
Germany

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