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Why do governments default, and why don't they default more often?

Buiter, Willem H.; Rahbari, Ebrahim - C.E.P.R. Discussion Papers - 2013

This paper considers the economic and political drivers of sovereign default, focusing on countries rich enough to render sovereign default a ‘won’t pay’ rather than a ‘can’t pay’ phenomenon. Unlike many private contracts, sovereign debt contracts rely almost exclusively on...

Persistent link: https://www.econbiz.de/10011084128

Long Term Debt and the Political Support of a Monetary Union

Uhlig, Harald - C.E.P.R. Discussion Papers - 1997

This paper examines the role of long-term debt in political support for a monetary union or, more generally, an inflation-reduction policy. The central idea is that the decision on membership of the union leads to a redistribution between debtors and creditors, if they are holding long-term debt...

Persistent link: https://www.econbiz.de/10005123670

Central Banks: Powerful, Political and Unaccountable?

Buiter, Willem H. - C.E.P.R. Discussion Papers - 2014

-of-last-resort and market-maker-of-last-resort roles, providing liquidity to financially distressed and illiquid financial institutions … of liquidity and the Treasury’s solvency support for systemically important financial institutions. All activities of the …

Persistent link: https://www.econbiz.de/10011084413

Systemic Risk, Interbank Relations and Liquidity Provision by the Central Bank

Freixas, Xavier; Parigi, Bruno; Rochet, Jean-Charles - C.E.P.R. Discussion Papers - 1999

We model systemic risk in an interbank market. Banks face liquidity needs as consumers are uncertain about where they … need to consume. Interbank credit lines allow banks to cope with these liquidity shocks while reducing the cost of …

Persistent link: https://www.econbiz.de/10005661695

Precautionary hoarding of liquidity and inter-bank markets: Evidence from the sub-prime crisis

Acharya, Viral V; Merrouche, Ouarda - C.E.P.R. Discussion Papers - 2012

We study the liquidity demand of large settlement (first-tier) banks in the UK and its effect on the Sterling Money … Markets before and during the sub-prime crisis of 2007-08. Liquidity holdings of large settlement banks experienced on average … banks to park liquidity at the central bank rather than lend in the market. We show that following this structural break …

Persistent link: https://www.econbiz.de/10011084226

EMU in the Early Years: Differences and Credibility

Buti, Marco; Sapir, André - C.E.P.R. Discussion Papers - 2001

The main issue in the early years of EMU is one of credibility. On one hand, high exposure to asymmetric shocks and low adaptability (be it in terms of stabilization or adjustment) to both symmetric and asymmetric shocks make the early years of EMU potentially problematic. On the other hand,...

Persistent link: https://www.econbiz.de/10005123746

On the Role of Conflicting National Interests in the ECB Council

Grüner, Hans Peter - C.E.P.R. Discussion Papers - 1999

This paper studies the strategic interaction of Euroland's national macroeconomic players and the ECB council under two alternative assumptions on central bank behavior: (i) all members of the ECB council are concerned about Euroland's macroeconomic aggregates and (ii) the ECB council is...

Persistent link: https://www.econbiz.de/10005504342

Comparing Inflation and Price Level Targeting: the Role of Forward Guidance and Transparency

Honkapohja, Seppo; Mitra, Kaushik - C.E.P.R. Discussion Papers - 2015

We examine global dynamics under learning in New Keynesian models with price level targeting that is subject to the zero lower bound. The role of forward guidance is analyzed under transparency about the policy rule. Properties of transparent and non-transparent regimes are compared to each...

Persistent link: https://www.econbiz.de/10011213315

Bank and Sovereign Risk Interdependence in the Euro Area

Kollintzas, Tryphon; Tsoukalas, Konstantinos - C.E.P.R. Discussion Papers - 2015

We develop a dynamic stochastic general equilibrium model to study bank risk and sovereign risk interdependence in the Euro Area. We find that an increase in capital investment risk shock, results in a considerably deeper recession when sovereign risk is also present. This result has three...

Persistent link: https://www.econbiz.de/10011201352

Credit Spreads and Credit Policies

Correia, Isabel; De Fiore, Fiorella; Teles, Pedro; … - C.E.P.R. Discussion Papers - 2014

How should monetary and fiscal policy react to adverse financial shocks? If monetary policy is constrained by the zero lower bound on the nominal interest rate, subsidising the interest rate on loans is the optimal policy. The subsidies can mimic movements in the interest rate and can therefore...

Persistent link: https://www.econbiz.de/10011083684

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