In this analytical policy brief, CEPS Director Daniel Gros explores whether there is a fundamental difference between a formal sovereign default with a haircut and debt monetization, which reduces the purchasing power for investors by the same amount. He argues that there is indeed a difference...

Using the “trilemma indexes” developed by Aizenman et al. (2008) that measure the extent of achievement in each of the three policy goals in the trilemma — monetary independence, exchange rate stability, and financial openness — this paper examines how policy configurations affect...