Beetsma, Roel; Mavromatis, Kostas - In: Journal of International Money and Finance 45 (2014) C, pp. 91-111
We analyse different forms of debt mutualisation in a union of countries. One country suffers from a political … government to reduce debt and raises union welfare. This result is upheld under the time-consistent solution when there are costs … to the rest of the union of not providing financial rescue. Making the guarantee also conditional on sufficient …