Please use this identifier to cite or link to this item:
Koester, Gerrit
Sondermann, David
Year of Publication: 
Series/Report no.: 
ECB Occasional Paper 216
A macroeconomic stabilisation function for the euro area - as envisaged in the Five Presidents' Report - plays a central role in the debate on deepening Economic and Monetary Union (EMU). We evaluate a broad range of options, their impact on economic growth, macroeconomic stabilisation and synchronisation of the euro area business cycle, and review how they could be designed so they do not undermine incentives for welfare-enhancing national economic policies. A common macroeconomic stabilisation function, e.g. in the form of a European Unemployment Insurance (EUI), could in theory help stabilise the business cycle in the euro area, especially in some participating Member States. Yet, simulating the effects of such a function for 2002-2014 suggests that its stabilisation properties would have been relatively limited. At the same time, design options with meaningful safeguards and relatively low financing requirements would have been most efficient when comparing the degree of stabilisation with the size of the funds distributed among countries. Finally, we discuss some design elements of a scheme whose aim is to support the transition process towards more resilient economic structures in the euro area as envisaged in the Five Presidents' Report.
economic union
macroeconomic stabilisation
unemployment insurance
Persistent Identifier of the first edition: 
Document Type: 
Research Report
Social Media Mentions:

Files in This Item:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.