A Central Fiscal Stabilization Capacity for the Euro Area
March 26, 2018
Download PDF
Order a Print Copy
Also available inDisclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.
Summary
This note outlines a concrete proposal for a euro area CFC that could help smooth both country-specific and common shocks. Specifically, it proposes a macroeconomic stabilization fund financed by annual contributions from countries used to build up assets in good times and make transfers to countries in bad times, as well as a borrowing capacity in case large or persistent shocks exhaust the fund’s assets. The note also discusses several features aimed at avoiding permanent transfers between countries and making the CFC function as automatically as possible—to limit the scope for disputes over its operation—both of which are important points to make it politically acceptable.
Subject: Euro Area, Fiscal policy
Keywords: Central fiscal capacity, Euro Area, Fiscal Integration, Fiscal policy, Fiscal union, Macroeconomic policy mix, Macroeconomic Stabilization
Pages:
---
Volume:
---
DOI:
---
Issue:
---
Series:
Staff Discussion Notes No. 18/03
Stock No:
SDNEA2018003
ISBN:
9781484348178
ISSN:
2221-030X
