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Policy Paper

The problems of implementation and monitoring of fiscal policies in the EU: The case for a European Unemployment Benefit Reinsurance Scheme

Author:

Camille Pimont

About Camille
Originally from France, Camille Pimont moved to the UK in 2015 for her undergraduate studies. She is currently studying public policy at Fudan University, China, as part of a double degree with the London School of Economics and Political Science in global political economy of China and Europe (class of 2019/2021). She has worked for various organisations, from think tanks to startups, and is planning on working in European affairs after her graduation.
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Abstract

The European Union Fiscal Framework (EUFF) has failed to prevent unsustainable levels of debt. The problems of implementation and monitoring of fiscal policies in the EU have threatened the stability of the European Monetary Union (EMU), as the sovereign debt crisis highlighted in 2011. Considering the failure of the EUFF to prevent a crisis and especially in times of such an asymmetric shock, the EMU is in desperate need of an automatic stabiliser. Since the European Central Bank (ECB) can only intervene when an economic shock is common to the whole Eurozone, countries are left alone to deal with this type of shock. Their only tool left, fiscal policy, is fairly limited. A European unemployment benefit reinsurance scheme could fulfil this role of an automatic stabiliser by preventing the overcrowding of public finances during times of crisis. It would allow stabilisation across space, and mitigate asymmetric shocks in the Eurozone. For it to function to the best of its ability, it is suggestive that the reinsurance scheme is able to issue debt. Thus, the scheme would address symmetric shocks, and ensure stabilised consumption throughout the business cycle. This is particularly important since Eurozone countries have shown to follow similar business cycles, although the intensity of the ‘booms and busts’ differs from country to country.
How to Cite: Pimont, C., 2021. The problems of implementation and monitoring of fiscal policies in the EU: The case for a European Unemployment Benefit Reinsurance Scheme. The Public Sphere: Journal of Public Policy, 9(1).
Published on 08 May 2021.
Peer Reviewed

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