Why fiscal sustainability matters

Willem Buiter, 10 January 2014

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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.

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

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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).

Topics: Financial markets, International finance
Tags: Deauville, eurozone, Eurozone crisis, financial contagion, sovereign debt, sovereign debt restructuring

Incentives for avoiding delayed sovereign defaults

Ugo Panizza, 3 March 2013

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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.

Topics: Europe's nations and regions, International finance
Tags: Eurozone crisis, lender of last resort, sovereign debt restructuring

Sovereign default and the rules of engineering

Ugo Panizza, 2 March 2013

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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.

Topics: Europe's nations and regions, International finance
Tags: CACs, collective action clauses, sovereign debt restructuring

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