The simmering sovereign debt crisis in the Euro Zone represents a looming threat to the recovery of the world economy …, notably the adoption of the common currency. Adoption of the euro led to convergence of interest rates in periphery countries … estate bubbles and a financial sector crisis and to sharply increased budget deficits and worsened debt indicators and …

The simmering sovereign debt crisis in the Euro Zone represents a looming threat to the recovery of the world economy …, notably the adoption of the common currency. Adoption of the euro led to convergence of interest rates in periphery countries … estate bubbles and a financial sector crisis and to sharply increased budget deficits and worsened debt indicators and …

Bubbles are usually viewed as a threat to financial stability. This paper takes a more nuanced view. The world economy … rate of the economy g. As is well-known, rational bubbles are sustainable when r ≤ g in a steady-state equilibrium. Bubbles … can then implement a dynamically efficient equilibrium. We show that from a structural point of view, bubbles, Pay …

, the eurozone and beyond. We argue genesis of this crisis lies in the integration negotiations of 1991, ratified in 1992 …. These produced a flawed economic model within the eurozone. Given the seeds of decay were planted at origin; we argue the … solution can be found through a reconstructed eurozone via looser integration, where countries less equipped to deal with the …