Who would benefit from a fiscal Union?

Fiscal Union is the Union that is missing the euro area would be (almost) optimal monetary area. Fiscal Union is a necessity, otherwise the euro cannot survive in the long run. Fiscal Union, many in the EU strongly oppose, because I think that intuitively prredvsem this ‘rich northerners’ subsidize ‘the poor and lazy southerners’. But this ‘gut feeling’ the ordinary citizens does not have a lot in common with the facts. As illustrated by the recent IMF study (Toward a Fiscal Union for the Euro Area), would have the most to gain from fiscal Union, Germany. In the past 28 years have been just 14 years, Germany is entitled to fiscal transfers from the common budget, or the stabilisation fund.

transfer

 

The main purpose of such a Fund for stability is a kind of insurance or compensation mechanism, in which non-euro area Member States shall pay the annual amounts (between 1 and 2% of GDP) and from which you receive transfers, when affected by an asymmetric shock (country-specific crisis, which affects more than popvrečje of the euro area). This transfer mechanism eliminates the European Monetary Union, the built-in error that does not have a mechanism for the correction of the effects of the operation of a common currency, i.e. the creation of large trade imbalances between the members.

In the Member States of the euro area’s past 30 years of frequent crises and asymmetric with the operation of such a joint mechanism in the transfernega all the separate periods of greatly reduced the cost of obtaining and fiscal crises.

Most of the European mechanism, the largest Member of the transfernim acquired right of the euro area. During the period of the current euro crisis were also all members eligible for transfers. But in the period before the crisis between 1982 and 2007, most of the time would have been entitled to compensatory transfers all Germany, in which 14 years of 28 years. Followed by Italy (12 years old), Belgium and the Netherlands (11 years old) and Finland, France, Greece and Portugal (10 years). Slovenia is at the tail end and would have been eligible for transfers only in four years (However, in the short period covered, 1998-2007). For her, only Ireland and Estonia (3 years).

Such a proposal the institutional change of the euro area would of course lead to sustainability in the longer term. Without him, the euro area should fall apart, because no Government before its citizens can in the longer term to justify what’s going on in Greece (the decline of the GDP by 30%, high unemployment) or Spain (25%, 50% unemployment and unemployment among young people) and other PIIGSS. On the other hand, it should be noted that the current ad hoc way of helping countries in trouble means individual Member States at the level of implicit liabilities between 0.75 and 1.25% of GDP. So it’s about as much as Member States would pay into a common fund for stability.

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