Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/123198 
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper No. 5564
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
In this paper we analyse debt stabilization in a monetary union that features endogenous risk premia. In particular, we analyse debt stabilization in two diametrically opposed regimes. In the first regime, the “national fiscal discipline regime”, financial markets impose sovereign risk premia based on each country’s government debt level. In the second regime, the “eurobondsRegime”, financial markets impose a risk premium based on the average debt level in the mone-tary union. We compare outcomes in both regimes using simulations of a number of relevant scenarios.
Subjects: 
Eurobonds
sovereign debt sustainability
sovereign debt crisis
JEL: 
C32
H63
H68
H81
Document Type: 
Working Paper
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