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A Fiscal Stabilisation Function for the Eurozone

The Five Presidents' Report of 2015 called for a macroeconomic stabiliser that would be capable of dealing with asymmetric shocks. A European unemployment benefits scheme (EUBS) is one potential stabilisation mechanism, although other proposals for devising risk-sharing tools that could be deployed across the eurozone have also been put forward over the years. The following papers, based on a recent Intereconomics conference, explore and compare the advantages and disadvantages of the various schemes entertained. Which one holds the greatest promise of reducing the risk of deep recession? Do such schemes inevitably lead to moral hazard or are there practical safeguards that can be built into their provisions to minimise this risk? Are any of these proposals politically feasible in the near term? This Forum seeks to answer these questions, searching for solutions that can overcome the political resistance to risk sharing in order to secure the economic benefits of risk reduction.