The global surge in independent fiscal councils (IFCs) raises three related questions: How can IFCs improve the conduct of fiscal policy? Are they simultaneously desirable for voters and elected policymakers? And are they resilient to changes in political conditions? We build a model in which...

We identify investor moral hazard in the German fiscal federation. Our identification strategy is based on a variable, which was used by the German Federal Constitutional Court as an indicator to determine eligibility of two German states (Länder) to a bail-out, the interest payments-to-revenue...

This paper studies the behavior of sovereign spreads of countries in the European Monetary Union (EMU) and their apparent disconnection with country-specific fundamentals before the 2008- 2013 debt crisis. We test three characteristics of spreads: i) a change in the level of spreads, ii) a weak...