01879cas a2200253 a 4500 AALejournalIMF013913 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484334201 1018-5941 BD-DhAAL BD-DhAAL Furceri, Davide. The Euro Area Crisis : Need for a Supranational Fiscal Risk Sharing Mechanism? / Davide Furceri, Aleksandra Zdzienicka. Washington, D.C. : International Monetary Fund, 2013. 1 online resource (34 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The aim of this paper is to assess the effectiveness of risk sharing mechanisms in the euro area and whether a supranational fiscal risk sharing mechanism could insure countries against very severe downturns. Using an unbalanced panel of 15 euro area countries over the period 1979-2010, the results of the paper show that: (i) the effectiveness of risk sharing mechanisms in the euro area is significantly lower than in existing federations (such as the U.S. and Germany) and (ii) it falls sharply in severe downturns just when it is needed most; (iii) a supranational fiscal stabilization mechanism, financed by a relatively small contribution, would be able to fully insure euro area countries against very severe, persistent and unanticipated downturns. Mode of access: Internet Zdzienicka, Aleksandra. IMF Working Papers; Working Paper ; No. 2013/198 Full text available on IMF http://elibrary.imf.org/view/journals/001/2013/198/001.2013.issue-198-en.xml IMF e-Library