In times of fiscal stress, governments fail to adjust fiscal policy in line with the requirements for debt sustainability. Under these circumstances, monetary policy impacts the probability of sovereign default alongside inflation dynamics. Uribe (2006) studies the relationship between inflation...

Three years after the birth of the European Monetary Union (EMU) economists are still divided in assessing the ability of its key institutions to provide macroeconomic stability and foster necessary reforms. Blending empirical and theoretical data, experts offer a comprehensive survey of recent...