International lending, sovereign debt and joint liability : an economic theory model for amending the treaty of Lisbon
Basu, Kaushik, Stiglitz, Joseph. As the Eurozone crisis drags on, it is evident that a part of the problem lies in the architecture of debt and its liabilities within the Eurozone and, more generally, the European Union. This paper argues that a large part of the problem can be mitigated by permitting appropriately-structured cross-country liability for […]
Sovereign default and state-contingent debt
Martin Brooke, Rhys Mendes, Alex Pienkowski, Eric Santor. Recent Eurozone events have changed the perception that sovereign debt is a problem of emerging-market economies. This column highlights some major deficiencies of the current framework, and proposes two new and complementary types of state-contingent debt contracts. The first – sovereign cocos – are designed to tackle […]
The Eurozone: If only it were the 1930s
Crafts, Nicholas. This column argues that the legacy of public debt resulting from the crisis in the Eurozone is a serious threat. Both the size of the problem and the options to address it make life much more difficult for policymakers than was the case in the late 1930s after the collapse of the gold standard. […]
The ECB’s Bridge Too Far
Eichengreen, Barry. Is Europe’s economic crisis mutating once again? If debt fears are now being superseded by the danger of deflation, as recent data suggest, the European Central Bank has its work cut out for it – and there is nothing to suggest that it is up to the task. Πηγή: Project Syndicate πλήρες κείμενο
Saving the Euro: A Pyrrhic Victory?
Crafts, Nicholas. The survival of the euro has entailed a lengthy recession and has left an ominous legacy of public debt, but the fundamental flaws in its original design have not been corrected. In the 1930s the collapse of the Gold Standard was an integral part of the recovery process from the Great Depression, but […]
A Schuman compact for the euro area
Ashoka Mody. Five years of crisis have pushed Europe to take emergency financial measures to cushion the free fall of distressed countries. However, efforts to turn the crisis into a spur for “an ever closer union” have met with political resistance to the surrender of fiscal sovereignty. If such a union remains elusive, a perpetual […]
The Plot Against France
Krugman, Paul. On Friday Standard & Poor’s, the bond-rating agency, downgraded France. The move made headlines, with many reports suggesting that France is in crisis. But markets yawned: French borrowing costs, which are near historic lows, barely budged. Πηγή: The New York Times πλήρες κείμενο
The perils of private-sector deleveraging in the Eurozone
Bornhorst, Fabian, Marta Ruiz Arranz. Private and public debt in the Eurozone increased since the 2000s, and especially so in certain countries. This column presents evidence that high levels of private and public debt, together with deleveraging of all sectors, are especially harmful for economic growth. Private sector debt is more detrimental to growth than public […]
The Greek Debt Restructuring: An Autopsy
Zettelmeyer, Jeromin, Trebesch, Christoph & Gulati, Mitu. The Greek debt restructuring of 2012 stands out in the history of sovereign defaults. It achieved very large debt relief—over 50 percent of 2012 GDP—with minimal financial disruption, using a combination of new legal techniques, exceptionally large cash incentives, and official sector pressure on key creditors. But it […]
Fiscal Consolidation in the Euro Area: How Much Can Structural Reforms Ease the Pain?
Anderson, Derek, Hunt, Ben & Snudden, Stephen. The IMF’s Global Integrated Monetary and Fiscal model (GIMF) is used to examine the scope for structural reforms in the euro area to offset the negative impact of fiscal consolidation required to put public debt back on a sustainable path. The results suggest that structural reforms in core […]