A fiscal shock absorber for the Eurozone? Lessons from the economics of insurance

Daniel Gros, 19 March 2014

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Even before the euro crisis started, it had been widely argued that the Eurozone needed a mechanism to help countries overcome idiosyncratic shocks. The experience of the crisis itself seemed to make this case overwhelming, and throughout the EU institutions it is now taken for granted that the Eurozone needs a system of fiscal shock absorbers.

Topics: EU institutions, Macroeconomic policy, Welfare state and social Europe
Tags: euro, eurozone, Eurozone crisis, fiscal policy, fiscal shock absorbers, fiscal shocks, fiscal union, insurance

Banking union: Ireland vs Nevada, an illustration of the importance of an integrated banking system

Daniel Gros, 27 November 2012

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The Eurozone crisis has demonstrated how an insolvent sovereign can destroy a national banking system, Greece, but also how an insolvent banking system can almost sink the sovereign – Ireland and Spain (Wyplosz 2012).

Topics: EU institutions, EU policies
Tags: banking union, ECB, fiscal union, Ireland, Nevada

Don't expect too much from EZ fiscal union – and complete the unfinished integration of European capital markets!

Mathias Hoffmann, Bent E. Sørensen, 9 November 2012

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The sovereign debt crisis apparently suggests that Eurozone economies should now move substantially closer towards fiscal union. Current policy discussions revolve much more around how such a fiscal union should be designed than whether fiscal union can solve Europe’s underlying problems of economic coherence. What can we expect from a fiscal union?

Topics: EU policies, International finance, Monetary policy
Tags: banking union, capital markets, Eurozone crisis, fiscal union, risk, Risk sharing

Spillover effects in a fiscal union: Evidence from US states and Treasury bond markets

Rabah Arezki, Bertrand Candelon, Amadou Sy, 1 August 2012

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The market for US municipal bonds, a $2.9 trillion tax-exempt bond market amounting to about one third of the US treasury market, has often been viewed as a safe haven by individual investors.1  The most recent US state to default was Arkansas in 1933, during the Great Depression.

Topics: International finance, Monetary policy
Tags: bond markets, fiscal union, US

The euro’s salvation lies in a little less Europe; not more Europe

Avinash Persaud, 25 April 2012

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The European credit crisis is as political as it is complicated. This breeds solutions in search of the problem. One of these is the ubiquitous idea that the euro’s woes can only be settled by fiscal union; the more rigid the better and no room for backsliding.

Topics: EU policies, Europe's nations and regions
Tags: Eurozone crisis, fiscal union

Lessons for Europe’s fiscal union from US federalism

C Randall Henning, Martin Kessler, 25 January 2012

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The Eurozone crisis and debate over fiscal reform have led many observers to pray for salvation by a modern, European version of Alexander Hamilton. By this they generally mean someone capable of leading a movement for a robust fiscal union and implementing this vision.

Topics: EU policies, Politics and economics
Tags: Eurozone crisis, fiscal union, US, US federalism

The threat to use the printing press

Hans-Werner Sinn, 18 November 2011

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Fortunately, Nicolas Sarkozy is not getting his banking licence for the EFSF. The Luxembourg rescue fund is not going to buy government bonds of endangered countries with freshly printed money. The ECB, however, may continue to do this.

Topics: EU policies, Europe's nations and regions
Tags: EZ crisis, fiscal union, Germany

Eurozone banks must be freed from national capitals

Nicolas Véron, 13 October 2011

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Most of Europe has been engulfed by a systemic banking crisis for more than four years, even as policymakers and bankers themselves have strived to deny it. As pointed out by many columns on this site over the past few months (see a collection on the EZ Crisis Phase 2 page), things are even worse.

Topics: EU institutions, Europe's nations and regions, International finance, Politics and economics
Tags: decoupling, fiscal union

How Argentina left its Eurozone

Eduardo Levy Yeyati, 2 October 2011

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The European predicament is:

Topics: EU policies, Europe's nations and regions, Monetary policy
Tags: Argentina, devaluation, Eurozone crisis, fiscal union

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