Artikel

A stabilization fund can make the Euro area more crisis-proof

Reorganizing European fiscal policy is a main topic in current reform considerations. In particular, the creation of a European stabilization mechanism is being discussed. This study examines the macroeconomic effects of a stabilization fund, the economic consequences of which are analyzed in an equilibrium model. The model shows that a stabilization fund reduces economic fluctuations and is thus a mechanism for making the entire currency area more crisis-proof in the future. However, it should be noted that a stabilization fund may be more politically feasible than shifting responsibility from the national level to a new European Ministry of Finance. Moreover, moral hazard in regards to the behavior of individual countries must be taken into account when designing the stabilization fund. For example, parallel to the introduction of a European stabilization fund, compliance with fiscal rules should be effectively enforced.

Language
Englisch

Bibliographic citation
Journal: DIW Weekly Report ; ISSN: 2568-7697 ; Volume: 8 ; Year: 2018 ; Issue: 22/23 ; Pages: 193-200 ; Berlin: Deutsches Institut für Wirtschaftsforschung (DIW)

Classification
Wirtschaft
Business Fluctuations; Cycles
Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
Macroeconomic Issues of Monetary Unions
Subject
monetary union
stabilization fund
fiscal policy

Event
Geistige Schöpfung
(who)
Clemens, Marius
Klein, Mathias
Event
Veröffentlichung
(who)
Deutsches Institut für Wirtschaftsforschung (DIW)
(where)
Berlin
(when)
2018

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Artikel

Associated

  • Clemens, Marius
  • Klein, Mathias
  • Deutsches Institut für Wirtschaftsforschung (DIW)

Time of origin

  • 2018

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