Author Archives: ADEMU

POLICY BRIEF: Macroeconomic stabilisation in heterogeneous societies


  • To construct a quantitative model where distributional issues matter
  • To use that model to analyse previously unconsidered shocks
  • To display new interactions between fiscal and monetary policies useful for stabilisation purposes

By Morten Ravn

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Agreeing to an unemployment insurance system for the euro area?

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

Lessons from the euro crisis and dealing with its debt overhang

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

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ADEMU explained: Recessions following expansions and the instability of market economies, video with Franck Portier

Franck Portier explains why market economies are fundamentally unstable in this short video. Continue reading

POLICY BRIEF: Recessions following expansions: The instability of market economies


  • 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

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POLICY BRIEF: One money, many markets


  • Euro area aggregate business cycle explains a large proportion of the short-run fluctuations of its member countries.
  • Monetary policy transmission in the euro area appears to be persistently heterogeneous across member countries.
  • The degree of heterogeneity is inversely related to the degree of cross-border institutional convergence. While country-level financial variables react fairly similarly to the same monetary policy shock, variables naturally related to markets that have seen little convergence, such as housing and labour markets, react in significantly asymmetric ways.
  • Indeed, the heterogeneity found in monetary transmission into housing markets and personal consumption is correlated with differences in home ownership rates – an indicator reflecting many dimensions in which national housing markets differ from each other.

By João Duarte

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ADEMU final conference, with State of the Union 2018 – a short report with papers and presentations

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.

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ADEMU final conference – day three photographs at State of the Union 2018

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 Continue reading