Full text: Repair the roof when the sun is shining (171)

Executive summary 
day-to-day basis is left primarily to the financial markets, that is to that institu­
tion that the global crisis, at the latest, revealed to be incapable of providing 
measured assessments of credit-worthiness. Negative (positive) shifts in senti­
ment would have cumulative-causation effects by raising (lowering) borrowing 
costs. The "Maastricht 2.0" proposal would in reality achieve the exact opposite 
of its stated intention of creating stability, making the euro area an economic 
area in which sudden crisis can appear at any time for the smallest real­
economic reason and even, ultimately, from an entirely spurious shift in finan­
cial market sentiment. 
There exist a wide range of proposals that are in accordance with an "inte­
grationist" view that risk-sharing and policy coordination in the euro area 
must be intensified. Most proponents are largely agreed on the need to build 
a budgetary capacity at European level. There is a lot of uncertainty and discus­
sion about the form this capability should take, though. Should the focus be on 
cyclical stabilization in the presence of asymmetric shocks and divergence or 
rather on providing European public goods? Should an EU (or EMU) level budg­
etary capacity should have its own resources, and if so how should they be 
financed? 
As an alternative or supplement cross-border automatic stabilisers have 
been proposed. A European unemployment insurance can be designed in 
various ways but also faces trade-offs with respect to different objectives (stabili­
sation, budget neutrality). Stabilisation effects could be non-negligible, while 
technical problems of implementation within and between the countries need 
to be addressed. National stabilisers could also be bolstered by introducing 
common minimum standards for national unemployment insurance systems. 
Responsibility for supplying European public goods could be part of the 
remit of a European finance "Minister". Some public goods should be more 
easily delivered at the "federal" level. This is the case, for example, of transna­
tional public investments but also of migration and refugees' policies at 
European level, whose management and costs rely mostly on a few countries. A 
streamlined and centralized supply of European public goods would boost 
growth and increase productivity; especially if one thinks of the important 
investment, and economies of scale related to the energy transition. If such 
public goods were financed via a European tax based on corporation tax, Euro­
pean level public goods could be provided while exerting a certain counter­
cyclical effect.
        

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