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
- To understand the roots of the polarisation of risk in countries in the euro area
- To design institutional frameworks that combine aggregate risk reduction with enhanced risk sharing
By Giancarlo Corsetti, Cambridge University and CEPR
Árpád Ábrahám and João Brogueira provide a brief overview of ADEMU’s findings and proposals in relation to a European Unemployment Insurance System in this short video.
- To examine the potential benefits of a European Unemployment Insurance System (EUIS)
- To evaluate the extent to which member states would benefit from such a system
- To assess whether member states would unanimously be in favour of this change without the need for permanent cross-border monetary transfers
By Árpád Ábrahám, João Brogueira de Sousa, Ramon Marimon and Lukas Mayr
By Thomas Cooley (chair), Charles Bean, Jean Pierre Danthine, Lars Feld, Jose Manuel Campa, Fernandez, Lucrezia Reichlin, René Smits and Thomas Sargent.
We may be reaching the conclusion of our three-year Horizon 2020-funded project, but our campaign to share our results and proposals is just beginning.
Ademu’s final conference took place at the European University Institute in Florence on the 9th and 10th May 2018. During the conference, the results of the three-year Horizon 2020 project were debated and analysed by Ademu coordinators and esteemed economists, academics and legal experts. Gergő Motyovszki and Jan Teresiński have provided a detailed review of the proceedings.
As the ADEMU project closes, we now have 134 working papers in our extensive collection of research. Continue reading
- To evaluate the recent experience of the EMU, assessing the Van Rompuy report ‘Towards a genuine economic and monetary union’ (2012) and the Five Presidents’ Report (2015)
- To use that experience and the research of Ademu to reassess the overall fiscal and monetary framework of the EMU
- Present a proposal to strengthen the economic and fiscal union in Europe
By Ramon Marimon