ABSTRACT
The economic system is subject to considerable shocks. Some of these are related to incidental cases such as natural disasters. Others have a cyclical character; such as the business cycle. Yet others have to do with the shortcomings of the system, for instance a financial crisis. All bring with them considerable cost. One of the traditional tasks of governments is to cope with such shocks and bring stability so as to avoid the cost. Traditionally, both budget and monetary instruments have been used by national governments to stabilize the economy. As integration increases, such national actions become ineffective, so the European Union has assumed a role in stabilization policies.
