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Completing the EMU with a European Unemployment Benefits Scheme
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1 IlariaInBxl CEPS_thinktan k Thinking ahead for Europe Completing the European Economic and Monetary Union with a European Unemployment Benefits Scheme Workshop 1: Towards a Fiscal Union www.ceps.e u ILARIA MASELLI Research Fellow, CEPS
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Transcript of Completing the EMU with a European Unemployment Benefits Scheme
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IlariaInBxl CEPS_thinktank
Thinking ahead for Europe
Completing the European Economic and Monetary Union with a European Unemployment Benefits SchemeWorkshop 1: Towards a Fiscal Union
www.ceps.eu
ILARIA MASELLI Research Fellow, CEPS
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What are we talking about?
•An unemployment benefits scheme•An automatic stabiliser•A budget for the eurozone/EU•A European labour market policy •A form of fiscal union•A European welfare scheme
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Why a stabiliser?
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The economic rationale (I)
• In the EMU: monetary policy is gone and fiscal policy is limited!
o …and can be pro-cyclical!!!• Spillover effects & sub-optimal spending
o National UB become insufficient • Labour markets rigidities
o Prices (= wages) don’t adjust easilyo Mobility limited
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The 1970s, 1990s and the 2010s• 1970s > too forward looking• 1990s > good idea…but • Too many issues on the Maastricht table• Technical issues: EMU budget EU budget?• Reluctance to increase EU budget while putting limits
on national expenditures• Shocks triggered by financial sector difficult to imagine• Enlargement ahead
• 2010s > theoretical and empirical evidence come together!
6The economic rationale (II):The Banking Union and the Capital Markets Union• The BU and CMU will reduce likelihood of large shocks and
provide the stabilization needed
• BU and CMU limited• Shocks may have different nature than financial• Financial integration can also generate instability
o Europe bank-dominated o doom loop bank-sovereign
BU + CMU + autom. stabilisercomplements rather than substitutes
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Why an unemployment insurance scheme?
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Other options
• Investment plan à la Juncker •More regional policies•An output gap scheme•A GDP scheme•A kurzarbeit scheme
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Why unemployment benefits scheme is superior•Quintessentially anti-cyclical
• Goes directly into the ‘right’ pocket
•Non-discretionary•Easy to measure
• Based on head-count• Data quickly available
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Not an easy but a necessary step!
“Further progress requires the manifestation of a political will. This will is today uncertain and needs
to show itself and to fortify itself by action. At a time when Europe finds itself confronted with
redoubtable dangers, under the name of “inflation”, “massive balance of payments
deficits” and “unemployment”, the only reasonable way for the member countries is to
face together (…) these perils”
Marjolin Report, 1975
de
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@IlariaInBxl @CEPS_thinktank
www.ceps.eu
Bedankt!Merci!
Thank You!
