The objective of this paper is to assess whether external debt makes a difference for public debt stabilization, where external debt is considered through the non-residents' holdings according to a Balance of Payments perspective. The analysis is empirical and considers the case of Italy, one of...

This paper argues that the Eurozone crisis stems from a risk management failure in the Eurosystem's design, and that applying insurance theory is useful. We model risk neutral agents choosing portfolios of government bonds of n countries in a monetary union and other assets. We firstly analyse a...

Rising public debt everywhere has raised the question of how to reduce debt again in the future. High public debt also seems to be an impediment for the exit of central banks from ultra-low interest rates and quantitative easing. Historical precedents and proposals have included austerity,...

We argue a holdout is not a destructive investor behaviour but a rational investment decision. This investment decision is characterised by the mean-variance approach. We investigate intercreditor conflict by diverse portfolio structure. We demonstrate that at some point during the Greek (2012)...

In this paper we analyse debt stabilization in a monetary union that features endogenous risk premia. In particular, we analyse debt stabilization in two diametrically opposed regimes. In the first regime, the "national fiscal discipline regime", financial markets impose sovereign risk premia...

To make the no-bailout clause credible and enhance the effectiveness of crisis assistance, a consistent institutional and legal framework is needed to ensure that private creditors contribute to crisis resolution. Getting activated as part of ESM crisis assistance, we propose a two-stage...

There have been criticisms of debt sustainability analysis in general, including the IMF's own evaluation of the usefulness of its debt sustainability methodology (e.g., IMF, 2017). This paper's focus is narrow. On the basis of theoretical arguments and empirical evidence, it argues that the...

We study whether and how much the interest bill conditions the size and composition of public expenditures. The group of EU 15 countries over the 1995-2016 period is the object of analysis. We study both total public expenditures and public expenditures by function of government in order to...

The objective of this paper is to gain insights into the relationship between deficit-reducing policies and the evolution of the debt/GDP ratio. We consider past events of fiscal consolidation in a selected group of EU countries, by using the new data set recently made available by Devries et...

In this paper we document and examine unusual fluctuations in the G-Fund, which is one of five funds available in a voluntary federal government employee retirement savings vehicle called the Thrift Savings Plan. The G-Fund is managed as "internally" held debt by the United States Department of...