Starting from the view that the crises in the euro zone were basically triggered by financial markets and reinforced by a lack of instruments for effective economic policy at the EMU level (Economic and Monetary Union), this working paper contributes to the ongoing debate on how to reform the...

The fiscal governance of the European Economic and Monetary Union (EMU) was the result of a political compromise. This led to an imbalanced and unsustainable framework, which contributed to the outbreak of the Eurozone debt crisis. During the crisis, European leaders embarked on a reform effort...

The fiscal governance of the EMU is in dire need of reform. Its current arrangements suff er from several shortcomings, most notably, the limitations they impose on national fiscal policies, steering them towards too restrictive or pro-cyclical stances; the absence of an unconditional lender of...

"We study the nature of systemic sovereign credit risk using CDS spreads for the U.S. Treasury, individual U.S. states, and major European countries. Using a multifactor affine framework that allows for both systemic and sovereign-specific credit shocks, we find that there is considerable...