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The Economics and Law of Sovereign Debt and Risk Sharing: Some Lessons from the Eurozone Crisis

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  • Basu Kaushik

    (Former Chief Economist and Senior Vice President of the World Bank)

Abstract

Analyzing the source of the Eurozone sovereign debt crisis, the paper argues the need for greater risk sharing and joint liability across sovereigns. This will require amending some of the legal provisions that underlie the European Union and the creation of the Euro. Once this is done it will be possible to consider the creation of Eurobonds and other liability arrangements, which can promote investment and job creation. A simple theoretical model is presented to bolster the argument.

Suggested Citation

  • Basu Kaushik, 2016. "The Economics and Law of Sovereign Debt and Risk Sharing: Some Lessons from the Eurozone Crisis," Review of Law & Economics, De Gruyter, vol. 12(3), pages 495-506, November.
    • Handle: RePEc:bpj:rlecon:v:12:y:2016:i:3:p:495-506:n:2
    DOI: 10.1515/rle-2016-0040
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    References listed on IDEAS

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    1. Hans-Bernd Schäfer, 2012. "The Sovereign Debt Crisis in Europe, Save Banks Not States," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 9(2), pages 179-195, August.
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    10. Basu, Kaushik, 2015. "An Economist in the Real World: The Art of Policymaking in India," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262029626, December.
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    Cited by:

    1. Badarau, Cristina & Huart, Florence & Sangaré, Ibrahima, 2021. "Macroeconomic and policy implications of eurobonds," International Review of Law and Economics, Elsevier, vol. 65(C).

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