Bubbles and Self-enforcing Debt (November 2007, with Guido Lorenzoni)
... country is denied credit in all future periods. BR show that if the country ever borrows a positive amount, there will eventually come a time at which it is better off defaulting and financing all future consumption with positive asset positions. This result has widely been interpreted as stating tha ...
... country is denied credit in all future periods. BR show that if the country ever borrows a positive amount, there will eventually come a time at which it is better off defaulting and financing all future consumption with positive asset positions. This result has widely been interpreted as stating tha ...
The Chronicle of a Great Crisis: The Bank of Greece 2008-2013
... to operate smoothly, even in periods of acute uncertainty. Thus a banking crisis —which would also have had a direct impact on the country’s future within the euro area— was prevented. At the same time, the banking system, assisted by appropriate planning on the part of the state and the Bank of Gre ...
... to operate smoothly, even in periods of acute uncertainty. Thus a banking crisis —which would also have had a direct impact on the country’s future within the euro area— was prevented. At the same time, the banking system, assisted by appropriate planning on the part of the state and the Bank of Gre ...
The Chronicle of the Great Crisis - The Bank of Greece 2008-2013
... to operate smoothly, even in periods of acute uncertainty. Thus a banking crisis —which would also have had a direct impact on the country’s future within the euro area— was prevented. At the same time, the banking system, assisted by appropriate planning on the part of the state and the Bank of Gre ...
... to operate smoothly, even in periods of acute uncertainty. Thus a banking crisis —which would also have had a direct impact on the country’s future within the euro area— was prevented. At the same time, the banking system, assisted by appropriate planning on the part of the state and the Bank of Gre ...
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... the reinforcement effect for financial stability. We argue that, among other factors, an extended debt maturity is the endogenous response to the build-up of international reserves in emerging and developing economies. Thus, besides their direct effects on financial stability, international reserves ...
... the reinforcement effect for financial stability. We argue that, among other factors, an extended debt maturity is the endogenous response to the build-up of international reserves in emerging and developing economies. Thus, besides their direct effects on financial stability, international reserves ...
Lost and Found: Market Access and Public Debt Dynamics
... default/restructuring, whichever is earlier”.9 As emphasized by IMF (2016), this definition is rather broad, including distress events that have not necessarily implied a default or a debt restructuring. This is particularly relevant considering that—for example—in the aftermath of the global financ ...
... default/restructuring, whichever is earlier”.9 As emphasized by IMF (2016), this definition is rather broad, including distress events that have not necessarily implied a default or a debt restructuring. This is particularly relevant considering that—for example—in the aftermath of the global financ ...
Monetary Policy, Fiscal Policy, and Secular Stagnation at the Zero
... Figure 15 Life Expectancy and Effective Retirement Age in the Eurozone.......................... 16 Figure 16 Income Inequality in the Eurozone........................................................................ 16 Figure 17 Income Distribution in the Eurozone by Quintile ....................... ...
... Figure 15 Life Expectancy and Effective Retirement Age in the Eurozone.......................... 16 Figure 16 Income Inequality in the Eurozone........................................................................ 16 Figure 17 Income Distribution in the Eurozone by Quintile ....................... ...
LDC Debt Policy
... heavily indebted nations moved from a trade surplus of $4 billion in 1982 to $43 billion in 1984 and reduced their current account deficit from $5 1 billion to near zero. At the same time, the commitments from early rounds of concerted lending were disbursed. The result was that major debtors found ...
... heavily indebted nations moved from a trade surplus of $4 billion in 1982 to $43 billion in 1984 and reduced their current account deficit from $5 1 billion to near zero. At the same time, the commitments from early rounds of concerted lending were disbursed. The result was that major debtors found ...
The real effects of debt - Bank for International Settlements
... measure it and mitigate it. 5 That means writing down models in which debt truly matters and working through the implications. Like a cancer victim who cannot wait for scientists to find a cure, policymakers cannot wait for academics to deliver the synthesis that will ultimately come. Instead, autho ...
... measure it and mitigate it. 5 That means writing down models in which debt truly matters and working through the implications. Like a cancer victim who cannot wait for scientists to find a cure, policymakers cannot wait for academics to deliver the synthesis that will ultimately come. Instead, autho ...
NBER WORKING PAPER SERIES OPTIMAL RESERVE MANAGEMENT AND SOVEREIGN DEBT Laura Alfaro
... the demand for international loans derives from a desire to smooth consumption. Given the sovereign’s willingness-to-pay incentive problems, additional reserves in these types of models tend to reduce sustainable debt levels.4 Second, the strategy of assuming constant debt levels does not address o ...
... the demand for international loans derives from a desire to smooth consumption. Given the sovereign’s willingness-to-pay incentive problems, additional reserves in these types of models tend to reduce sustainable debt levels.4 Second, the strategy of assuming constant debt levels does not address o ...
Implications of Globalization on Growing External Debt in Eight
... capital is a scarce production factor in those countries, are especially stressed with benefits of external debt (Uzun, Karakoy, Kabadayi, & Emsen, 2012). Poverty is also perceived as one of important factors of rising indebtedness. In the context of external debt analysis, poverty is related to the ...
... capital is a scarce production factor in those countries, are especially stressed with benefits of external debt (Uzun, Karakoy, Kabadayi, & Emsen, 2012). Poverty is also perceived as one of important factors of rising indebtedness. In the context of external debt analysis, poverty is related to the ...
Banking on Bonds: The New Links Between States and Markets*
... could be traced to ‘the growth of markets that are relatively “hidden” from regulators’, including the European repo market where financial institutions borrow against collateral. The European repo market has become structurally important for European private and public finance. First, it tripled in v ...
... could be traced to ‘the growth of markets that are relatively “hidden” from regulators’, including the European repo market where financial institutions borrow against collateral. The European repo market has become structurally important for European private and public finance. First, it tripled in v ...
the elusive recovery
... trapped in low growth. Moreover, the prospect of a Brexit has created a new source of uncertainty in Europe. On top of this comes the Trump election in the USA. This political and institutional uncertainty combines with other sources of macroeconomic (deflationary risk) and financial uncertainty (no ...
... trapped in low growth. Moreover, the prospect of a Brexit has created a new source of uncertainty in Europe. On top of this comes the Trump election in the USA. This political and institutional uncertainty combines with other sources of macroeconomic (deflationary risk) and financial uncertainty (no ...
Free Full text
... Context. Despite the policy constraints imposed by its membership in the currency union, Greece has made significant progress in unwinding its macroeconomic imbalances. But extensive fiscal consolidation and internal devaluation have come with substantial costs for society, which contributed to dela ...
... Context. Despite the policy constraints imposed by its membership in the currency union, Greece has made significant progress in unwinding its macroeconomic imbalances. But extensive fiscal consolidation and internal devaluation have come with substantial costs for society, which contributed to dela ...
The Debt-Overhang Hypothesis and the Effects on Low/High Income
... Our goal of estimating the general behavior of investments during times of high external debt for a chosen sample of countries during a chosen period of time fits best with conducting a quantitative study using econometric methods. The quantitative method is well suited for explaining patterns and d ...
... Our goal of estimating the general behavior of investments during times of high external debt for a chosen sample of countries during a chosen period of time fits best with conducting a quantitative study using econometric methods. The quantitative method is well suited for explaining patterns and d ...
Working Paper 17-6: Does Greece Need More Official Debt Relief? If
... Since mid-2015, the International Monetary Fund (IMF), EU institutions, and European creditor countries have been arguing whether Greece requires additional official debt relief—and if so, how much.1 One-and-a-half years later, their positions seem as far apart as ever. In a report released on Febru ...
... Since mid-2015, the International Monetary Fund (IMF), EU institutions, and European creditor countries have been arguing whether Greece requires additional official debt relief—and if so, how much.1 One-and-a-half years later, their positions seem as far apart as ever. In a report released on Febru ...
ESBies: Safety in the tranches
... These simulations take default probabilities as given. In fact, underlying default probabilities can be expected to change endogenously in response to banks’ safer sovereign bond portfolios. In Section 5, we extend a workhorse model of the diabolic loop between sovereign risk and bank risk developed ...
... These simulations take default probabilities as given. In fact, underlying default probabilities can be expected to change endogenously in response to banks’ safer sovereign bond portfolios. In Section 5, we extend a workhorse model of the diabolic loop between sovereign risk and bank risk developed ...
Austerity: The History of a Dangerous Idea
... market as a refuge. Instead, yields and equities fell together because what sent the markets down was a broader concern over a slowing US economy: a lack of growth. This is doubly odd since the cause of the anticipated slowdown, the debt-ceiling agreement of August 1, 2011, between Republicans and D ...
... market as a refuge. Instead, yields and equities fell together because what sent the markets down was a broader concern over a slowing US economy: a lack of growth. This is doubly odd since the cause of the anticipated slowdown, the debt-ceiling agreement of August 1, 2011, between Republicans and D ...
Indeterminacy in Sovereign Debt Markets: an Empirical Investigation ∗ Luigi Bocola
... sovereign debt crisis. After a period of sharp increases, in August 2012, interest rate spreads in the euro area periphery declined to almost their pre-crisis level. These declines have been attributed to the establishment of the Outright Monetary Transaction (OMT) program, a framework that gives th ...
... sovereign debt crisis. After a period of sharp increases, in August 2012, interest rate spreads in the euro area periphery declined to almost their pre-crisis level. These declines have been attributed to the establishment of the Outright Monetary Transaction (OMT) program, a framework that gives th ...
Short-Term Capital Flows
... The 1990s were a boom period for international lending. The outstanding stock of debt of emerging-market economies roughly doubled between 1988 and 1997, from $1 trillion to $2 trillion.2 While medium- and long-term debt grew rapidly as well, it was short-term debt that rose particularly rapidly dur ...
... The 1990s were a boom period for international lending. The outstanding stock of debt of emerging-market economies roughly doubled between 1988 and 1997, from $1 trillion to $2 trillion.2 While medium- and long-term debt grew rapidly as well, it was short-term debt that rose particularly rapidly dur ...
Count the Limbs: Designing Robust Aggregation Clauses in
... clauses” promised to eliminate free-riding holdouts for the first time in the history of sovereign bond restructuring. A single vote across different bond issues could also open up new possibilities for abuse. The markets might have rebelled. Instead, they yawned. On October 7, barely a month after ...
... clauses” promised to eliminate free-riding holdouts for the first time in the history of sovereign bond restructuring. A single vote across different bond issues could also open up new possibilities for abuse. The markets might have rebelled. Instead, they yawned. On October 7, barely a month after ...
Does austerity pay off - Centre for Economic Policy Research
... the Priority Program 1578. The usual disclaimer applies. ...
... the Priority Program 1578. The usual disclaimer applies. ...
Fiscal Monitor - Addressing Fiscal Challenges to Reduce Economic
... of fiscal policies and public debts. Such concerns—which had their origin in weak fiscal fundamentals but subsequently intensified owing to doubts about the credibility of the euro area crisis resolution mechanisms—jeopardize the stability of the area, with major potential spillovers for other sovereig ...
... of fiscal policies and public debts. Such concerns—which had their origin in weak fiscal fundamentals but subsequently intensified owing to doubts about the credibility of the euro area crisis resolution mechanisms—jeopardize the stability of the area, with major potential spillovers for other sovereig ...
Does austerity pay off
... across time and countries. In some instances they are slightly below zero, in others they are as high as 70 percentage points. A total of about 1500 observations also allows us to compute the empirical density function. It increases sharply at low levels of spreads, as the number of observations for ...
... across time and countries. In some instances they are slightly below zero, in others they are as high as 70 percentage points. A total of about 1500 observations also allows us to compute the empirical density function. It increases sharply at low levels of spreads, as the number of observations for ...
European debt crisis
The European debt crisis (often also referred to as the Eurozone crisis or the European sovereign debt crisis) is a multi-year debt crisis that has been taking place in the European Union since the end of 2009. Several eurozone member states (Greece, Portugal, Ireland, Spain and Cyprus) were unable to repay or refinance their government debt or to bail out over-indebted banks under their national supervision without the assistance of third parties like other Eurozone countries, the European Central Bank (ECB), or the International Monetary Fund (IMF).The detailed causes of the debt crises varied. In several countries, private debts arising from a property bubble were transferred to sovereign debt as a result of banking system bailouts and government responses to slowing economies post-bubble. The structure of the eurozone as a currency union (i.e., one currency) without fiscal union (e.g., different tax and public pension rules) contributed to the crisis and limited the ability of European leaders to respond. European banks own a significant amount of sovereign debt, such that concerns regarding the solvency of banking systems or sovereigns are negatively reinforcing.As concerns intensified in early 2010 and thereafter, leading European nations implemented a series of financial support measures such as the European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM). The ECB also contributed to solve the crisis by lowering interest rates and providing cheap loans of more than one trillion euro in order to maintain money flows between European banks. On 6 September 2012, the ECB calmed financial markets by announcing free unlimited support for all eurozone countries involved in a sovereign state bailout/precautionary programme from EFSF/ESM, through some yield lowering Outright Monetary Transactions (OMT).Return to economic growth and improved structural deficits enabled Ireland and Portugal to exit their bailout programmes in July 2014. Greece and Cyprus both managed to partly regain market access in 2014. Their bailout programme is scheduled to end in March 2016. Spain never officially received a bailout programme. It's rescue package from the ESM was earmarked for a bank recapitalization fund and did not include financial support for the government itself.The crisis had significant adverse economic effects and labour market effects, with unemployment rates in Greece and Spain reaching 27%, and was blamed for subdued economic growth, not only for the entire eurozone, but for the entire European Union. As such, it can be argued to have had a major political impact on the ruling governments in 9 out of 19 eurozone countries, contributing to power shifts in Greece, Ireland, France, Italy, Portugal, Spain, Slovenia, Slovakia, and the Netherlands.