Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/69289
Authors: 
Brenke, Karl
Year of Publication: 
2013
Citation: 
[Journal:] DIW Economic Bulletin [ISSN:] 2192-7219 [Volume:] 3 [Year:] 2013 [Issue:] 1 [Pages:] 16-20
Abstract: 
The European Monetary Union brought with it a standardization of monetary policy and a system of fixed exchange rates. This was accompanied by disincentive effects which, in turn, resulted in serious economic distortions. Proposals are currently being made - not only by DIW Berlin - as to how compensatory payment mechanisms could be used to better synchronize the economic development of the member states in the euro area in future. The present article discusses some of the problems of such transfer systems in detail and, on the whole, evaluates such mechanisms far more skeptically than the previous two articles in this issue. Comprehensive compensatory payment systems are always associated with a risk of resource wastage. Furthermore, these systems can also have undesirable negative effects. The alternative to a compensatory payment system, some form of common European unemployment insurance, is not a workable solution since national benefits already act as automatic stabilizers. Such a move would ultimately only lead to a transfer of competences to the supranational level. This would be accompanied by a harmonization of national unemployment benefit systems and the deferral of control functions to a neutral European authority - and thus, more red tape. Moreover, the introduction of a common unemployment insurance scheme would, at least initially, result in a significant redistribution of resources, which could raise questions about distribution in the donor countries.
Subjects: 
harmonization of business cycles, unemployment insurance
unemployment insurance
JEL: 
E62
J88
Document Type: 
Article

Files in This Item:
File
Size
124.66 kB





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