The European Fiscal Framework and the Stability and Growth Pact (SGP) have had great significance since the completion of the European Monetary Union (EMU) in 1999. The current enforcement and credibility problems, and discussion about reforming the SGP, as well as the failure to impose...

This paper develops a new methodology in order to study the role of dynamic expectations. Neither reference-point theories nor feedback models are sufficient to describe human expectations in a dynamic market environment. We use an interdisciplinary approach and demonstrate that expectations of...

This paper analyzes different government debt relief programs in the European Monetary Union. I build a model and study different options ranging from debt relief to the European Stability Mechanism (ESM). The analysis reveals the following: First, patient countries repay debt, while impatient...