In this chapter we offer novel answers to three related questions:
- What are the potential benefits of developing a European unemployment insurance system (EUIS)?
- Could all the European countries involved benefit from a common, simple change to their current unemployment insurance systems?
- Could unanimous agreement for this change be achieved without needing permanent transfers across countries?
To properly address these questions, we first develop a dynamic equilibrium model with job search frictions, which provides a new characterisation of how different euro area labour markets are and therefore calls into question whether such an agreement can ever be reached. Nevertheless, our answer to the final question is: yes, it can be done! By Árpád Ábrahám, João Brogueira de Sousa, Ramon Marimon and Lukas Mayr, European University Institute Continue reading
Introduction: Country risk in the euro area crisis
Looking back at the first twenty years in the life of the euro, it is apparent that the institutions and policies in the euro area have failed to prevent both the gross underestimation of (country, private and public) risk during the first decade, and the magnification and polarisation of risk along national borders during the second decade. While the initial underestimation of risk was not specific to the euro area, risk polarisation was arguably a key unique feature of the euro area crisis. Understanding the root of this risk polarisation, and which steps can be taken to ensure that the euro area is not systematically vulnerable to this kind of crisis, has been a priority of ADEMU. By Giancarlo Corsetti, Cambridge University and CEPR
Franck Portier explains why market economies are fundamentally unstable in this short video. Continue reading
- To provide new facts about business cycles in the economy and challenge the common view that the economy is fundamentally stable
- Developing models that illustrate a necessary trade-off between severity and length of recessions
- Recommend structural policies to limit recessions, rather than responses to shocks
By Paul Beaudry, Dana Galizia and Franck Portier
View the policy brief.
In May 2018, ADEMU held a final conference to discuss the findings of the three-year Horizon 2020 research project into the future of the euro and stabilising the eurozone. With some sessions held in conjunction with State of the Union 2018, the event was staged across three locations in Florence and attended by global economists, politicians, academics and researchers.
ADEMU’s final conference was held on 9-10 May at the European University Institute in Florence, with further joint sessions held with the State of the Union 2018 conference at Badia Fieselona and Palazzo Vecchio on 10 and 11 May. You can see all the photographs from day three, at our joint session with State of the Union 2018, here. If you would like to request any high-resolution images, you can email us at email@example.com. Continue reading