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National Insurance against Unevenly Distributed Shocks in a European Monetary Union

Published online by Cambridge University Press:  17 August 2016

Jacques Mélitz  and
Silvia Vori
Jacques Mélitz
Affiliation:
INSEE, Paris
Silvia Vori
Affiliation:
Banca d’Italia, Rome
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Summary

We examine proposals to introduce national insurance against unevenly distributed shocks in the European Community. This insurance would operate differently from tax and government spending activities that now yield regional insurance within countries, since these activities are mainly designed for other purpose such as income redistribution and general revenue-raising. According to our evidence, the appeal of such insurance is very limited because the risks are too highly correlated and there is an excessive chance that a country in difficulty would not receive aid. The costs of a continuing programme are likely to exceed the benefits.

Résumé

Résumé

Nous examinons le propositions en faveur d’une assurance nationale contre des chocs distributifs — c’est-à-dire d’incidence inégale — dans la Communauté Européenne. Cette assurance fonctionnerait différemment que le font les systèmes de recettes et de dépenses nationales qui fournissent de l’assurance régionale aujourd’hui, car ces systèmes ont largement d’autres buts que l’assurance régionale, tels que la redistribution des revenus ou la collecte des ressources. Selon nos résultats, l’attrait du style d’assurance communautaire en question serait très limité parce que les risques sont trop córreles. Il y a trop de chance qu’un pays en difficulté ne reçoivent pas d’aide. Les coûts d’un tel programme semblent supérieurs aux bénéfices.

Keywords

F41F42H77F41F42H77
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 59 , Issue 1-2: Monetary Integration in Europe , 1993 , pp. 81 - 104
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1993 

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Footnotes

*

Mélitz is in the research department of INSEE, Paris, and affiliated with the Hautes Etudes Commerciales, the Institut des Etudes Politiques, and the CEPR. Silvia Vori is in the research department of the Banca d’Italia, Rome. The collaboration began while the former was visiting the Banca d’Italia during the fall of 1991. The authors would like to thank John Abowd, Charles Bean, Alexander Italianer, Gilles Saint-Paul and Ignazio Visco for valuable comments and Pierre Villa for help with some French data.

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