Towards a fiscal union? On the acceptability of a fiscal transfer system in the eurozone

  • There is a large, but yet growing debate about the need to complement the European monetary union with a stronger fiscal union. This paper reviews the potential trade-offs between effectiveness, moral hazard problems, and permanent redistribution. In particular, we contribute to the question of how member states may be willing to enter into a stronger fiscal union if the evolution of this union may imply large redistribution under incomplete contracting. We discuss clawback mechanisms that have been suggested in the literature, but conclude that clawbacks are undesirable, as they would essentially destroy the insurance value of a fiscal union. Instead, we propose that a clearly defined exit option as a guarantee against involuntary redistribution can make entry into a stronger fiscal union less risky and hence more attractive for member states.

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Metadaten
Author:Shafik Hebous, Alfons J. WeichenriederORCiDGND
URN:urn:nbn:de:hebis:30:3-390617
URL:http://safe-frankfurt.de/de/policy-center/publikationen/detailsview/publicationname/towards-a-fiscal-union-on-the-acceptability-of-a-fiscal-transfer-system-in-the-eurozone.html
Parent Title (English):SAFE white paper series, 28
Series (Serial Number):SAFE white paper series (28)
Publisher:SAFE, Sustainable Architecture for Finance in Europe
Place of publication:Frankfurt
Document Type:Working Paper
Language:English
Year of Completion:2015
Year of first Publication:2015
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2016/01/12
Tag:EMU; European unemployment insurance; Eurozone; fiscal transfers
Edition:July 2015
Page Number:25
HeBIS-PPN:380857367
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Sammlungen:Universit├Ątspublikationen
Licence (German):License LogoDeutsches Urheberrecht