Author Archives: ADEMU

ADEMU explained: A new fiscal and monetary framework for the EMU? The EU Presidents’ roadmap in 2018, video with Ramon Marimon


June 30, 2018

In this short video, Ramon Marimon takes a look at the potential for a new fiscal and monetary framework for the EMU in light of the EU presidents’ roadmap in 2018. Continue reading

ADEMU explained: The political economy of policy implementation, video with David Levine


David Leviine explains the political economy of policy implementation and rent-seeking in the banking sector in this short video. Continue reading

ADEMU explained: Financial stability and the role of macroprudential policies, with Radim Boháček


Radim Boháček explains the importance of macroprudential policies in this short video.  Continue reading

ADEMU explained: Macroeconomic stabilization with heterogeneous agents, video with Morten Ravn


Morten Ravn provides a short overview of macroeconomic stabilization in this short video. Continue reading

ADEMU explained: A European Stability Fund for the EMU, video with Ramon Marimon


Ramon Marimon provides a brief overview of ADEMU’s findings and proposals in relation to a European Stability Fund for the EMU in this short video. Continue reading

POLICY BRIEF: A European Stability Fund for the EMU


Objectives

  • To design a robust crisis management mechanism within the EU that will simultaneously provide risk sharing and fiscal stabilisation
  • To evaluate how the crisis would have developed had such mechanism been in place
  • To suggest a realistic mechanism for its implementation

By Ramon Marimon, European University Institute

View the policy brief.

 

ADEMU explained: Lessons from the euro crisis and dealing with the debt overhang, video with Giancarlo Corsetti


Giancarlo Corsetti looks back at 20 years of the euro and asks what lessons can be learned from history in this short video.  Continue reading

A European Stability Fund for the EMU


There are two related issues currently on the EMU agenda: the need to strengthen the European Stability Mechanism “as a robust crisis management mechanism” (European Commission 2017a), and the need to enhance the EU’s capacity to provide risk sharing and fiscal stabilisation (Junker et al. 2015). Building on our ADEMU work “On the optimal design of a Financial Stability Fund” (Ábrahám et al. 2018), my co-authors and I show that the most efficient design would be to merge both functions into a European Stability Fund (ESF), which would effectively transform current risky debt liabilities into safe fund contracts, taking the form of long-term state contingent bonds subject to endogenous constraints, to avoid undesired redistribution or implicit bailouts and moral hazard problems. With this design as a constrained efficient mechanism, the ESF should also confront two additional pending issues: the ‘debt overhang’ problem, and the development of EU safe assets. Furthermore, the ESF can be implemented with minimal changes to the current structure and legal status of the ESM. In this chapter, I briefly summarise these findings. By Ramon Marimon, European University Institute, UPF – Barcelona GSE and CEPR. Continue reading