Boot, A.

Carletti, E.

Kotz, H.-H.

Krahnen, J.P.

Pelizzon, L.

Subrahmanyam, M.

English

This Policy Letter presents a proposal for designing a program of government assistance for firms hurt by the Coronavirus crisis in the European Union (EU). In our recent Policy Letter 81, we introduced a new, equity-type instrument, a cash-against-tax surcharge scheme, bundled across firms and countries in a European Pandemic Equity Fund (EPEF). The present Policy Letter 84 focuses on the principles and conditions relevant for the operationalization of a EPEF. Our proposal has several desirable features. It: a) offers better risk sharing opportunities, augmenting the resilience of businesses and EU economies; b) is need-based, thereby contributing to an effective use of resources; c) builds on conditions and credible controls, addressing adverse selection and moral hazard; d) is accessible to smaller and medium-sized firms, the backbone of Europe’s economy; e) applies Europewide uniform eligibility criteria, strengthening support among member states; f) is a scheme of limited duration, reducing (perceived) government interference in businesses; g) creates a templatefor a growth-oriented public policy, aligning public and private sector interests; and h) builds on the existing institutional infrastructure and requires minimal legislative adjustments

International Migration, Integration and Social Cohesion online publications

Corona and Financial Stability 4.0: Implementing a European Pandemic Equity Fund

https://pure.uva.nl/ws/files/54388502/Boot_et_al._2020_Corona_and_Financial_Stability_4.0_Implementing_a_European_Pandemic_Equity_Fund_SAFE_Policy_Letter_84.pdf

Corona and Financial Stability 4.0: Implementing a European Pandemic Equity Fund

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International Migration, Integration and Social Cohesion online publications