Is it too late to bail out the troubled countries in the Eurozone?
Conesa, Juan Carlos (Stony Brook University. Department of Economics)
Kehoe, Timothy J. (University of Minnesota. Department of Economics)

Date:	2014
Abstract:	In January 1995, US President Bill Clinton organized a bailout for Mexico that imposed penalty interest rates and induced the Mexican government to reduce its debt, ending the debt crisis. Can the Troika (European Commission, European Central Bank, and International Monetary Fund) organize similar bailouts for the troubled countries in the eurozone? Our analysis suggests that debt levels are so high that bailouts with penalty interest rates could induce the eurozone governments to default rather than reduce their debt. A resumption of economic growth is one of the few ways that the eurozone crises can end.
Grants:	Ministerio de Economía y Competitividad ECO2012-32392
Note:	Altres ajuts: NSF/SES-09-62865
Rights:	Tots els drets reservats.
Language:	Anglès
Document:	Article ; recerca ; Versió publicada
Subject:	International monetary arrangements and institutions ; National debt ; Debt management ; Sovereign debt ; Measurement of economic growth ; Aggregate productivity ; Cross-Country Output Convergence
Published in:	The American economic review, Vol. 104 Núm. 5 (May 2014) , p. 88-93, ISSN 0002-8282

DOI: 10.1257/aer.104.5.88

6 p, 548.1 KB

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