Herzog, Bodo (2016) Modelling Monetary and Fiscal Governance in the Wake of the Sovereign Debt Crisis in Europe. Economies, 4 (4). p. 9. ISSN 2227-7099
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Abstract
This paper analyzes different government debt relief programs in the European Monetary Union. I build a model and study different options ranging from debt relief to the European Stability Mechanism (ESM). The analysis reveals the following: First, patient countries repay debt, while impatient countries more likely consume and default. Second, without ESM loans, indebted countries default anyway. Third, if the probability to be an impatient government is high, then the supply of loans is constrained. In general, sustainable and unsustainable governments should be incentivized differently especially in a supranational monetary union. Finally, I develop policy recommendations for the ongoing debate in the Eurozone.
Item Type: | Article |
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Subjects: | Bengali Archive > Multidisciplinary |
Depositing User: | Unnamed user with email support@bengaliarchive.com |
Date Deposited: | 09 Jul 2023 04:30 |
Last Modified: | 16 Sep 2024 10:32 |
URI: | http://science.archiveopenbook.com/id/eprint/1587 |