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Automatic stabilisers for the euro area: what is on the table?

Spath, Nathalie Julia, (2016), “Automatic stabilisers for the euro area: what is on the table?”, Jacques Delors Institute, 30 June

This Policy paper contributes to the debate on how to equip the euro area with a mechanism for asymmetric shocks absorption. It responds to the challenge of automatic stabilization and adds to potential solutions by analysing the promises and problems of automatic stabilization mechanisms for the euro area. The Policy paper considers three of the most influential proposals for an automatic stabilization mechanism: a cyclical shock insurance (CSI) put forward by Enderlein, Guttenberg & Spiess (2013); a European Unemployment Insurance (EUI) proposed by Dullien (2014a); and a Reinsurance proposed by Beblavý, Gros & Maselli (2015). The analysis reveals the underlying assumptions of each proposal, identifies main requirements and compares net payments as well as stabilization properties.

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