rate policy, will destabilize the economy if the feedback from debt surprises back to the primary surplus is too weak. This … design of fiscal and monetary policy in emerging markets where sovereign credibility is not well established. Recent debt …

The present study puts forward a plan for solving the sovereign debt crisis in the euro area (EA) in line with the … significant part of the outstanding sovereign debt (at market prices) of the countries in the EA and convert it to zero …-coupon bonds. No transfers will take place between individual states; taxpayers in any EA country will not be involved in the debt …

debts. The government issues debt and can either inflate away its domestic debt or default on its external component. Under … a discretionary policy, the existence of domestic debt creates a costly inflation bias. On the other hand, the cost of … foreign debt increases with the quantity of debt issued due to the increasing likelihood of default. This tradeoff between …