Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/219463 
Year of Publication: 
2017
Series/Report no.: 
EconPol Working Paper No. 01
Publisher: 
ifo Institute - Leibniz Institute for Economic Research at the University of Munich, Munich
Abstract: 
The recent unravelling of the Eurozone's financial integration raised concerns about feedback loops between sovereign and banking insolvency. The paper provides a theory of the feed backloop that allows for both domestic bailouts of the banking system and sovereign debt forgiveness by international creditors or solidarity by other countries. The theory has important implications for the re-nationalization of sovereign debt, macroprudential regulation, and the rationale for banking unions.
Document Type: 
Working Paper

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