With the economic and financial crisis, the EU has begun taking an interest in a European unemployment insurance scheme to serve as an automatic stabiliser
in the eurozone, since the governments that share the same currency have lost the capacity to use budget stabilisers to deal with a recession.
Also, when a nation's currency weakens, inward remittances rise and, as such, they act as an automatic stabiliser
," Basu added.
Also, when a nation's currency weakens, inward remittance rises and as such, it acts as an automatic stabiliser
," Kaushik Basu, chief economist, World Bank, said in Washington.
At the plenary session, the Commission will be asked to state its intentions on a possible green paper on the feasibility and appropriateness of an automatic stabiliser
During the round table, on 11 October, he further developed this point of view, supporting a European unemployment benefit scheme, "which would act as an automatic stabiliser
by temporarily reducing the social public spending of the countries most affected, without introducing long-term transfer flows.
The structure of the tax system has a significant impact on the size of the automatic stabilisers
. The higher the average tax rate on income from a cyclically sensitive source, the larger will be the automatic stabiliser
Fiscal consolidation should focus on permanent measures while letting automatic stabilisers
"The fiscal framework appropriately provides flexibility to adapt to weaker than expected economic developments, which allows the operation of the automatic stabilisers
In a genuine currency union, wealth transfers and automatic stabilisers
mean that such discrepancies do not pose a problem.
GOVERNMENT deficits across most of the developed world widened sharply after 2007 as 'automatic stabilisers
' and discretionary support muted the damage done by the financial crisis.
The Finance Ministry said that while it would continue to allow automatic stabilisers
- mostly benefit payments and a lower tax take - to support the economy, yesterday's figures showed there was no scope for deficit-financed spending.
"If growth should weaken, the automatic stabilisers
should be allowed to operate to help avoid jeopardising the fragile recovery."