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The Economics of Sovereign Debt, Bailouts and the Eurozone Crisis

Gourinchas, Pierre-Olivier - 2020

Despite a formal 'no-bailout clause', we estimate significant net present value transfers from the European Union to … differences across countries. We characterize bailout size and likelihood as a function of the economic fundamentals (economic … 'Northern view' (transfers weaken fiscal discipline). While a stronger no-bailout commitment reduces risk-shifting, it may not …

Persistent link: https://www.econbiz.de/10012481598

Efficient Bailouts?

Bianchi, Javier - 2012

We develop a quantitative equilibrium model of financial crises to assess the interaction between ex-post interventions in credit markets and the buildup of risk ex ante. During a systemic crisis, bailouts relax balance sheet constraints and mitigate the severity of the recession. Ex ante, the...

Persistent link: https://www.econbiz.de/10012460074

Collective Moral Hazard, Maturity Mismatch and Systemic Bailouts

Farhi, Emmanuel - 2009

policy is non-targeted. The ex post benefits from a monetary bailout accrue in proportion to the number amount of leverage … bailout instruments is endogenous and characterize the structure of optimal bailouts …

Persistent link: https://www.econbiz.de/10012463512

Debt Fragility and Bailouts

Cooper, Russell - 2012

This paper studies debt fragility and the sharing of the resulting strategic uncertainty through ex post bailouts. Default arises in equilibrium because of both fundamental shocks and beliefs. The probability of default depends on borrowing rates and, in equilibrium, on the beliefs of lenders...

Persistent link: https://www.econbiz.de/10012460282

Kicking the Can Down the Road : Government Interventions in the European Banking Sector

Acharya, Viral V. - 2020

an econometric approach that addresses the endogeneity associated with governmental bailout decisions in identifying …

Persistent link: https://www.econbiz.de/10012481392

Bank sovereign bond holdings, sovereign shock spillovers, and moral hazard during the European crisis

Beltratti, Andrea - 2015

From 2010 to 2012, the relation between bank stock returns from European Union (EU) countries and the returns on sovereign CDS of peripheral (GIIPS) countries is negative. We use days with tail sovereign CDS returns of peripheral countries to identify the effects of shocks to the cost of...

Persistent link: https://www.econbiz.de/10012457516

Fiscal Rules, Bailouts, and Reputation in Federal Governments

Dovis, Alessandro - 2017

Expectations of bailouts by central governments incentivize overborrowing by local governments. In this paper, we ask if fiscal rules can correct these incentives to overborrow when central governments cannot commit and if these rules will arise in equilibrium. We address these questions in a...

Persistent link: https://www.econbiz.de/10012453772

Can the Central Bank Alleviate Fiscal Burdens?

Reis, Ricardo - 2016

Central banks affect the resources available to fiscal authorities through the impact of their policies on the public debt, as well as through their income, their mix of assets, their liabilities, and their own solvency. This paper inspects the ability of the central bank to alleviate the fiscal...

Persistent link: https://www.econbiz.de/10012455666

Contagion in the European Sovereign Debt Crisis

Glover, Brent - 2014

for the interconnectedness of sovereign debt in Europe …

Persistent link: https://www.econbiz.de/10012458098

A Fiscal Union for the Euro : Some Lessons from History

Bordo, Michael D. - 2011

The recent financial crisis 2007-2009 was the longest and the deepest recession since the Great Depression of 1930. The crisis that originated in subprime mortgage markets was spread and amplified through globalised financial markets and resulted in severe debt crises in several European...

Persistent link: https://www.econbiz.de/10012461278