We report a CEPS Working Document by Bernard Delbecque, Proposal for a stabilization fund for the EMU. This paper argues that it should be possible to complement Europe’s Economic and Monetary Union with an insurance-type shock absorption mechanism to increase the resilience of member countries to economic shocks and reduce output volatility. This mechanism would not lead to permanent transfers between countries. In fact, a member state contribute to the fund when overcomes its growth forecasts, at the contrary a member state will receive contributions by the fund when will not reach its growth forescasts. This mechanism could replace a common fiscal policy without the establishment of a central authority.
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