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A budget for Europe's monetary union


  • Guntram B. Wolff


The four main options for stabilisation of regional shocks to the euro area are - unemployment insurance, payments related to deviations of output from potential, the narrowing of large spreads, and discretionary spending. The common resource would need to be well-designed to be distributionally neutral, avoid free-riding behaviour and foster structural change while be of sufficient size to have an impact. Linking budget support to large deviations of output from potential appears to be the best option. A borrowing capacity equipped with a structural balanced budget rule could address area-wide shocks. It could serve as the fiscal backstop to the bank resolution authority. Resources amounting to 2 percent of euro-area GDP would be needed for stabilisation policy and financial stability.

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  • Guntram B. Wolff, 2012. "A budget for Europe's monetary union," Policy Contributions 762, Bruegel.
  • Handle: RePEc:bre:polcon:762

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    References listed on IDEAS

    1. Jean Pisani-Ferry & André Sapir & Nicolas Véron & Guntram B. Wolff, 2012. "What kind of European banking union?," Policy Contributions 731, Bruegel.
    2. Silvia Merler & Jean Pisani-Ferry, 2012. "Sudden Stops in the Euro Area," Review of Economics and Institutions, Università di Perugia, vol. 3(3).
    3. Pierfederico Asdrubali & Bent E. Sørensen & Oved Yosha, 1996. "Channels of Interstate Risk Sharing: United States 1963–1990," The Quarterly Journal of Economics, Oxford University Press, vol. 111(4), pages 1081-1110.
    4. Jean Pisani-Ferry & Guntram B. Wolff, 2012. "The fiscal implications of a banking union," Policy Briefs 748, Bruegel.
    5. Hofmann, Boris & Remsperger, Hermann, 2005. "Inflation differentials among the Euro area countries: Potential causes and consequences," Journal of Asian Economics, Elsevier, vol. 16(3), pages 403-419, June.
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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. La stabilisation macroéconomique en Zone Euro (II)
      by (Simon Ganem) in BS Initiative on 2014-02-12 11:29:33


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    Cited by:

    1. Jacques Drèze & Alain Durré & Jacques Drèze & Jean-François Carpantier, 2014. "Fiscal Integration and Growth Stimulation in Europe," Recherches économiques de Louvain, De Boeck Université, vol. 80(2), pages 5-45.
    2. Jörg Bibow, 2013. "Lost at Sea:The Euro Needs a Euro Treasury," FMG Special Papers sp227, Financial Markets Group.
    3. Fritz Breuss, 2012. "Towards a New EMU," WIFO Working Papers 447, WIFO.
    4. Heikki Oksanen, 2016. "Smoothing Asymmetric Shocks vs. Redistribution in the Euro Area: A Simple Proposal for Dealing with Mistrust in the Euro Area," CESifo Working Paper Series 5817, CESifo Group Munich.
    5. Jorg Bibow, 2013. "Lost at Sea: The Euro Needs a Euro Treasury," Economics Working Paper Archive wp_780, Levy Economics Institute.
    6. Győrffy, Dóra, 2014. "Válság és válságkezelés Görögországban. A puha költségvetési korlát szerepe a gazdasági összeomlásban
      [Crisis and crisis management in Greece. The role of soft budget constraints in the economic co
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 27-52.
    7. Jörg Bibow, 2013. "Lost at Sea: The Euro Needs a Euro Treasury," IMK Studies 35-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    8. repec:cpn:umkeip:v:16:y:2017:i:4:p:413-432 is not listed on IDEAS
    9. Delbecque, Bernard, 2013. "Proposal for a Stabilisation Fund for the EMU," CEPS Papers 8494, Centre for European Policy Studies.
    10. Nazaré Costa Cabral, 2016. "Which Budgetary Union for the E(M)U?," Journal of Common Market Studies, Wiley Blackwell, vol. 54(6), pages 1280-1295, November.
    11. Mario Sarcinelli, 2013. "The European Banking Union: Will It Be a True Union without Risk Sharing?," PSL Quarterly Review, Economia civile, vol. 66(265), pages 137-167.

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