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Insurance Mechanisms against Asymmetric Shocks in a Monetary Union a Proposal with an Application to EMU

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  • Oscar Bajo-Rubio
  • Carmen Díaz-Roldán

Abstract

Insurance Mechanisms against Asymmetric Shocks in a Monetary Union : a Proposal with an Application to EMU, by Oscar Bajo-Rubio and Carmen Díaz-Roldán In this paper we propose a simple, automatic insurance mechanism designed to cope with asymmetric shocks in a monetary union, which could be used as starting point of a more elaborated policy instrument. The mechanism would use as indicator of the occurrence of a shock the changes in the unemployment rate of the countries belonging to the union, and would be financed through a fund built from contributions of these countries as a percentage of their tax receipts. The fund would be distributed among the countries affected by a negative asymmetric shock according to the proportion in which every one of them would have been affected by the shock. Our proposal is illustrated by means of an empirical application to the case of EMU.

Suggested Citation

  • Oscar Bajo-Rubio & Carmen Díaz-Roldán, 2003. "Insurance Mechanisms against Asymmetric Shocks in a Monetary Union a Proposal with an Application to EMU," Recherches économiques de Louvain, De Boeck Université, vol. 69(1), pages 73-96.
    • Handle: RePEc:cai:reldbu:rel_691_0073
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    Cited by:

    1. Oscar Bajo-Rubio & Carmen Díaz-Roldán, 2007. "Vulnerability to Shocks in EMU: 1991–2004 (in English)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 57(5-6), pages 225-234, August.
    2. Amélie BARBIER-GAUCHARD, 2020. "Blueprint for the European Fiscal Union: State of knowledge and Challenges," Working Papers of BETA 2020-39, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. Thierry BETTI, 2020. "Fiscal transfers in a two-level fiscal framework: stabilizing properties according to the fiscal instrument," Working Papers of BETA 2020-11, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    4. Simón Sosvilla Rivero & Oscar Bajo Rubio & Carmen Díaz Roldán, "undated". "Sobre la efectividad de la política regional comunitaria: El caso de Castilla-la Mancha," Studies on the Spanish Economy 178, FEDEA.
    5. Patrick-Hervé Mbouombouo Mfossa, 2015. "GOUVERNANCE ECONOMIQUE ET STABILISATION DES CHOCS ASYMETRIQUES: Quel mécanisme pour une meilleure viabilité de la CEMAC ?," Working Papers hal-01213989, HAL.
    6. Óscar Bajo Rubio & Carmen Díaz Roldán, 2000. "On The Insurance Function Of Fiscal Policy In A Monetary Union," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 0012, Departamento de Economía - Universidad Pública de Navarra.
    7. Carmen Díaz-Roldán & Oscar Bajo-Rubio, "undated". "Vulnerability to Shocks in EMU: 1991-2004," Working Papers on International Economics and Finance 05-08, FEDEA.

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    More about this item

    Keywords

    Monetary union; asymmetric shocks; insurance function.;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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