Eurobonds : A Quantitative Analysis of Joint-Liability Debt
This paper assesses the consequences of implementing a joint liability debt system in a two-country small open economy model. With joint liability a default of one country makes the other participant liable for its debt. The results highlight a tra...
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/124101568645370178/Eurobonds-A-Quantitative-Analysis-of-Joint-Liability-Debt http://hdl.handle.net/10986/32425 |
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okr-10986-324252022-09-19T12:16:36Z Eurobonds : A Quantitative Analysis of Joint-Liability Debt Tsiropoulos, Vasileios EUROBONDS INVESTMENT DEBT MARKETS CAPITAL MARKETS JOINT LIABILITY DEFAULT RISK This paper assesses the consequences of implementing a joint liability debt system in a two-country small open economy model. With joint liability a default of one country makes the other participant liable for its debt. The results highlight a trade-off between the contagion risk, in the sense that this instrument may push some member states to default even though they are individually solvent, and cheaper access to credit on average, since lenders are at risk only if no participating sovereign is willing to service the debt. The findings suggest that the welfare consequences of this policy proposal hinge critically on the timing of its introduction: Introducing such instruments at the peak of the Eurozone crisis would have helped the Periphery and harm the Core member states, while its adoption during normal times has the potential to make all participants better-off. 2019-09-19T19:30:58Z 2019-09-19T19:30:58Z 2019-09 Working Paper http://documents.worldbank.org/curated/en/124101568645370178/Eurobonds-A-Quantitative-Analysis-of-Joint-Liability-Debt http://hdl.handle.net/10986/32425 English Policy Research Working Paper;No. 9017 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
EUROBONDS INVESTMENT DEBT MARKETS CAPITAL MARKETS JOINT LIABILITY DEFAULT RISK |
| spellingShingle |
EUROBONDS INVESTMENT DEBT MARKETS CAPITAL MARKETS JOINT LIABILITY DEFAULT RISK Tsiropoulos, Vasileios Eurobonds : A Quantitative Analysis of Joint-Liability Debt |
| relation |
Policy Research Working Paper;No. 9017 |
| description |
This paper assesses the consequences of
implementing a joint liability debt system in a two-country
small open economy model. With joint liability a default of
one country makes the other participant liable for its debt.
The results highlight a trade-off between the contagion
risk, in the sense that this instrument may push some member
states to default even though they are individually solvent,
and cheaper access to credit on average, since lenders are
at risk only if no participating sovereign is willing to
service the debt. The findings suggest that the welfare
consequences of this policy proposal hinge critically on the
timing of its introduction: Introducing such instruments at
the peak of the Eurozone crisis would have helped the
Periphery and harm the Core member states, while its
adoption during normal times has the potential to make all
participants better-off. |
| format |
Working Paper |
| author |
Tsiropoulos, Vasileios |
| author_facet |
Tsiropoulos, Vasileios |
| author_sort |
Tsiropoulos, Vasileios |
| title |
Eurobonds : A Quantitative Analysis of Joint-Liability Debt |
| title_short |
Eurobonds : A Quantitative Analysis of Joint-Liability Debt |
| title_full |
Eurobonds : A Quantitative Analysis of Joint-Liability Debt |
| title_fullStr |
Eurobonds : A Quantitative Analysis of Joint-Liability Debt |
| title_full_unstemmed |
Eurobonds : A Quantitative Analysis of Joint-Liability Debt |
| title_sort |
eurobonds : a quantitative analysis of joint-liability debt |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/124101568645370178/Eurobonds-A-Quantitative-Analysis-of-Joint-Liability-Debt http://hdl.handle.net/10986/32425 |
| _version_ |
1764476523411144704 |