Sovereign Default Risk and Bank Fragility in Financially Integrated Economies
Bolton, Patrick & Jeanne, Olivier. The Eurozone crisis has thrown into relief the dangers of financial contagion. The authors of CEPR DP8358 analyze the causes and consequences of sovereign debt crises in zones with financial integration. They conclude that without fiscal integration, the supply of government debt in these areas reaches an inefficient equilibrium, with safer governments […]
How Asia Copes with America’s Zombie Consumers
Roach, Stephen. Asia needs a new consumer. A post-crisis generation of “zombie consumers” in the United States is likely to hobble growth in global consumption for years to come. And that means that export-led developing Asia now has no choice but to turn inward and rely on its own 3.5 billion consumers. Of course, this […]
Ruby Slippers or an Endless Lent?
Mattich, Alen. What the euro zone’s periphery needs is a spot of debt forgiveness. It’ll be like clicking a pair of ruby slippers. Lifting the crushing debt burden off Irish, Portuguese and Greek shoulders is what’s needed to take these economies back to a prelapsarian idyll. Or so says conventional wisdom. Unfortunately, debt relief is […]
The lessons from the Icesave rejection
Danielsson, Jon & Zoega, Gylfi. Icelanders have voted against providing a government guarantee for claims made by the UK and the Dutch governments against Iceland’s deposit insurance fund. This column argues that the heated debates surrounding the referendum may provide a glimpse into the challenges that lie ahead for European policymakers as they attempt to […]