Insurance mechanisms against asymmetric shocks in a monetary union: an application to the European Monetary Union

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Date
1999Version
Acceso abierto / Sarbide irekia
Type
Documento de trabajo / Lan gaiak
Impact
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nodoi-noplumx
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Abstract
In this paper we offer a proposal of an automatic insurance mechanism designed to cope with asymmetric shocks in a monetary union. The mechanism would take as indicator the changes in the unemployment rate of the countries belonging to the union, and would be financed through a fund built from contributions of those countries as a percentage of their tax receipts. The fund would be later distribu ...
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In this paper we offer a proposal of an automatic insurance mechanism designed to cope with asymmetric shocks in a monetary union. The mechanism would take as indicator the changes in the unemployment rate of the countries belonging to the union, and would be financed through a fund built from contributions of those countries as a percentage of their tax receipts. The fund would be later distributed among the countries affected by a negative asymmetric shock according to the proportion in which every one of them would have been affected by the shock. The mechanism proposed is illustrated by means of an empirical application to the case of the European monetary union. [--]
Subject
Monetary union,
Asymmetric shocks,
Insurance function
Serie
Documentos de Trabajo DE - ES Lan Gaiak /
9910
Departament
Universidad Pública de Navarra. Departamento de Economía /
Nafarroako Unibertsitate Publikoa. Ekonomia Saila
Sponsorship
The authors acknowledge financial support from the Spanish Institute for Fiscal Studies.