Does fiscal sustainability matter only when there is a fiscal house on fire, as was the case with the Greek sovereign insolvency in 2011–12? Far from it.
Why fiscal sustainability matters
Willem Buiter, 10 January 2014
Topics: Financial markets, Global crisis, International finance, Macroeconomic policy
Tags: balance-sheet recession, banking, banking union, banks, capital flows, credit booms, Currency wars, emerging markets, eurozone, Eurozone crisis, financial crisis, fiscal policy, fiscal sustainability, global financial crisis, sovereign debt, sovereign debt restructuring
The ghost of Deauville
Ashoka Mody, 7 January 2014
The aversion to debt restructuring in the Eurozone has been remarkable, even though public debt ratios in several countries are well above the IMF-identified critical debt overhang threshold of 100% of GDP (IMF 2012). By early 2010, some recognised the urgency of restructuring Greek public debt (Calomiris 2010).
Incentives for avoiding delayed sovereign defaults
Ugo Panizza, 3 March 2013
The international financial architecture needs a structured mechanism for dealing with sovereign defaults. The main problem with the status quo is that countries tend to sub-optimally delay necessary defaults, leading to substantial loss of value for debtors and creditors alike.
Sovereign default and the rules of engineering
Ugo Panizza, 2 March 2013
The ongoing European crisis and the recent ruling (see, for example, Gelpern 2012) of the United States Court of Appeals for the Second Circuit in NML Capital Ltd. versus Republic of Argentina reignited the debate on sovereign debt restructuring.
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- Eurozone breakup would trigger the mother of all financial crisesEichengreen
- Panic-driven austerity in the Eurozone and its implicationsDe Grauwe, Ji
- Debt, deleveraging, and the liquidity trap: A new modelKrugman
Cadot, de Melo, 16 June 2014