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http://hdl.handle.net/1942/22489
Title: | Effects of Eurobonds: A stochastic sovereign debt sustainability analysis for Portugal, Ireland and Greece | Authors: | Tielens, J. VAN AARLE, Bas Van Hove, J. |
Issue Date: | 2014 | Publisher: | LOUISIANA STATE UNIV PR | Source: | JOURNAL OF MACROECONOMICS, 42, p. 156-173 | Abstract: | This paper assesses the impact of Eurobonds on sovereign debt dynamics for selected European member states (Greece, Ireland and Portugal). For each member state, we produce sovereign debt fan charts of (i) a baseline scenario (no Eurobonds) and (ii) a Full-Fledged Eurobond introduction. The key building blocks of our methodology are (i) a debt framework (which embeds the traditional recursive debt equation), (ii) a vector autoregressive model to take into account and parametrise macroeconomic uncertainty and (iii) a fiscal reaction function. Conditional on the absence of moral hazard, we find Eurobonds to be a good instrument to absorb macroeconomic shocks and to diminish uncertainty over future debt forecasts; for Ireland and Portugal, we find debt to be 20 percentage points lower than under our baseline scenario, by 2020. (C) 2014 Elsevier Inc. All rights reserved. | Notes: | [Tielens, J.; van Aarle, B.; Van Hove, J.] Katholieke Univ Leuven, Ctr Econ Studies, B-3000 Louvain, Belgium. [Tielens, J.; van Aarle, B.; Van Hove, J.] Katholieke Univ Leuven, Leuven Ctr Irish Studies, B-3000 Louvain, Belgium. [van Aarle, B.] Katholieke Univ Leuven, VIVES, B-3000 Louvain, Belgium. [van Aarle, B.] Ullasselt, B-3590 Diepenbeek, Belgium. [Van Hove, J.] HU Brussel, B-1000 Brussels, Belgium. | Keywords: | Eurobonds; Stability bonds; Sovereign debt sustainability; Sovereign debt crisis; Fan charts;Eurobonds; stability bonds; sovereign debt sustainability; sovereign debt crisis; fan charts | Document URI: | http://hdl.handle.net/1942/22489 | ISSN: | 0164-0704 | e-ISSN: | 1873-152X | DOI: | 10.1016/j.jmacro.2014.06.004 | ISI #: | 000347023700012 | Rights: | © 2014 Elsevier Inc. All rights reserved. | Category: | A1 | Type: | Journal Contribution | Validations: | ecoom 2016 |
Appears in Collections: | Research publications |
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