National Insurance Against Unevenly Distributed Shocks in a European Monetary Union

Jacques Melitz and Silvia Vori

No 697, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We examine proposals to introduce in the European Community national insurance against unevenly distributed shocks. This would operate differently from tax and government spending activities that now yield regional insurance within countries, since the latter are mainly designed for other purposes such as income redistribution and general revenue-raising. According to our evidence, the appeal of such insurance is very limited because the risks are too highly correlated and there is an excessive chance that a country in difficulty would not receive aid. The costs of a continuing programme are likely to exceed the benefits.

Keywords: European Monetary Union; Fiscal Federalism; Regional Insurance (search for similar items in EconPapers)
JEL-codes: F41 F42 H77 (search for similar items in EconPapers)
Date: 1992-09
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Citations: View citations in EconPapers (15)

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Working Paper: National Insurance against Unevenly Distributed Shocks in a European Monetary Union (1993)
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