One Scheme Fits All: A Central Fiscal Capacity for the EMU Targeting Eurozone, National and Regional Shocks

Roel Beetsma, Jacopo Cimadomo, Josha Van Spronsen

Publikation: Working paperForskning


This paper proposes a central fiscal capacity for the euro area that generates transfers in response to euro area, country, and region-specific shocks. The main novelty of this fiscal capacity is that it allows a joint response to these three types of shocks within a single scheme. Based on NUTS3 regional data over the last two decades and regional fiscal multiplier estimates, our analysis shows that - with a limited risk of moral hazard - substantial stabilisation could have been achieved in response to the eurozone and regional shocks, while country-specific shocks were on average less severe and therefore needed less stabilisation.
UdgiverEuropean Central Bank
Antal sider59
StatusUdgivet - maj 2022
NavnEuropean Central Bank. Working Papers


  • Central fiscal capacity
  • Macroeconomic stabilisation
  • Multilevel factor model
  • Bayesian inference