Monetary policy and fiscal dynamics are inexorably linked. When a government faces the risk of getting caught in a high debt trap, debt monetization may become an appealing option. However, independent central banks may be able to allay debt concerns without compromising price stability. One...

Why did Europe fail to manage the euro area crisis and what lessons can be drawn from this failure for Europe"s future? Studying the EU / IMF program that was imposed on Greece in May 2010 – the original sin of the crisis – highlights both the nature of the problem and the difficulty in...