Resolving Sovereign Debt Crises: Opening or Closing the Tap?

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Show simple item record Kohler, Wilhelm de_DE 2012-06-18 de_DE 2014-03-18T10:04:00Z 2012-06-18 de_DE 2014-03-18T10:04:00Z 2012 de_DE
dc.identifier.other 36681883X de_DE
dc.identifier.uri de_DE
dc.description.abstract This paper first describes the ingredients the present crisis in the euro zone and then evaluates the key options that policy makers face in resolving the crisis and avoiding similar crises in the future. I argue that the crisis should not be seen as caused by government profligacy alone. In many troubled countries, an unsustainable build-up of private sector debt was involved as well. I argue that a more fundamental problem is that the euro zone lacks an adjustment mechanism for balance of payments crises that may arise in its member countries, with or without excessive government deficits. The metaphor of taps to be opened or closed by policy is used to discuss the core trade offs that policy makers face. I discuss monetary taps, bailout taps, austerity taps and devaluation taps. I propose a simple model of government bond markets with sovereign insolvency to be used in order to evaluate EU-type bailouts. I discuss the pros and cons of austerity as a precondition for such bailouts, and I criticize the use of Target2 as a mechanism to absorb balance of national payments crises. en
dc.language.iso en de_DE
dc.publisher Universität Tübingen de_DE
dc.rights ubt-podno de_DE
dc.rights.uri de_DE
dc.rights.uri en
dc.subject.classification Euro <Währung> de_DE
dc.subject.ddc 330 de_DE
dc.subject.other Euro , Sovereign risk , Sovereign default , Government solvency , Lender of last resort , External balance , Balance of payments en
dc.title Resolving Sovereign Debt Crises: Opening or Closing the Tap? en
dc.type ResearchPaper de_DE
utue.publikation.fachbereich Wirtschaftswissenschaften de_DE
utue.publikation.fakultaet 6 Wirtschafts- und Sozialwissenschaftliche Fakultät de_DE
dcterms.DCMIType Text de_DE
utue.publikation.typ workingPaper de_DE 6279 de_DE
utue.publikation.source University of Tübingen Working Papers in Economics and Finance ; 39 de_DE


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