What kind of fiscal union?
Marzinotto, Benedicta, Sapir, André & Wolff, Guntram. The euro area’s shortcomings have become abundantly clear. It was set up without powers of strict surveillance over macroeconomic imbalances, crisis management and resolution instruments, or adequate banking supervision and resolution tools. The core reason for these failures is the absence of a fiscal union with corresponding authority over […]
Sovereign debt, government myopia, and the financial sector
Acharya, Viral, Rajan, Raghuram. Why do governments repay external borrowing? This column argues that myopic governments seeking popularity do not default when they are poor because they would lose access to debt markets and be forced to reduce spending. And they do not default when rich because of the adverse consequences to the domestic financial […]