Fiscal Risk Sharing and Stabilization in the EMU

Kerstin Bernoth () and Philipp Engler

Chapter 9 in Managing Risks in the European Periphery Debt Crisis, 2015, pp 148-162 from Palgrave Macmillan

Abstract: Abstract With the crisis in the euro area, the issue of the monetary union’s institutional structure has gained in significance. One problem with regard to the longer-term stability of the euro area is the absence of mechanisms to adequately absorb asymmetric cyclical shocks in the individual member states. Such an instrument is essential in order to be able to implement a single monetary policy suitable for all countries. Consequently, the European Monetary Union (EMU) should be equipped with an economic transfer mechanism1 — for instance, in the form of common unemployment insurance. This is not an instrument to solve the current crisis, but rather to provide greater stability to the EMU in the medium and long term.

Keywords: Monetary Policy; Business Cycle; Euro Area; Monetary Union; Transfer Payment (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-30495-7_9

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DOI: 10.1057/9781137304957_9

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