IDEAS home Printed from https://ideas.repec.org/a/bpj/rlecon/v12y2016i3p523-553n4.html
   My bibliography  Save this article

Consequences of Different Eurobond Proposals

Author

Listed:
  • Schäfer Hans-Bernd

    (Bucerius Law School, Hamburg, Germany)

  • Bigus Jochen

    (Freie Universität Berlin, Berlin, Germany)

Abstract

We analyze various Eurobond proposals and show that they have different effects on moral hazard, interest rates, international transfer payments and the necessity for European fiscal centralization. On closer inspection, these consequences are more diverse than the discussion on Eurobonds so far suggests. For instance, Eurobonds might increase rather than decrease marginal interest rates in weaker countries. Some proposals lead to international transfer payments while others do not. Some require changes to the Treaty on the Functioning of the European Union, others require changes to national constitutions, and others yet require both. Some proposals, while not necessitating such legal change, may still have mutual advantages for the issuing states.

Suggested Citation

  • Schäfer Hans-Bernd & Bigus Jochen, 2016. "Consequences of Different Eurobond Proposals," Review of Law & Economics, De Gruyter, vol. 12(3), pages 523-553, November.
    • Handle: RePEc:bpj:rlecon:v:12:y:2016:i:3:p:523-553:n:4
    DOI: 10.1515/rle-2016-0042
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/rle-2016-0042
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/rle-2016-0042?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ugo Panizza & Federico Sturzenegger & Jeromin Zettelmeyer, 2009. "The Economics and Law of Sovereign Debt and Default," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 651-698, September.
    2. 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.
    3. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    4. Longhofer, Stanley D. & Santos, Joao A. C., 2000. "The Importance of Bank Seniority for Relationship Lending," Journal of Financial Intermediation, Elsevier, vol. 9(1), pages 57-89, January.
    5. Jean Tirole, 2015. "Country Solidarity in Sovereign Crises," American Economic Review, American Economic Association, vol. 105(8), pages 2333-2363, August.
    6. Basu , Kaushik & Stiglitz, Joseph E., 2013. "International lending, sovereign debt and joint liability : an economic theory model for amending the treaty of Lisbon," Policy Research Working Paper Series 6555, The World Bank.
    7. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    8. Hans-Werner Sinn, 2015. "Der Euro: Von der Friedensidee zum Zankapfel," Books, by Staff of the ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 2015001.
    9. Hans-Werner Sinn, 2015. "The Euro: From Peace Project to Bone of Contention," Books, by Staff of the ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 201510, April.
    10. Beetsma, Roel & Mavromatis, Kostas, 2014. "An analysis of eurobonds," Journal of International Money and Finance, Elsevier, vol. 45(C), pages 91-111.
    11. Jakob von Weizsäcker & Jacques Delpla, 2010. "The Blue Bond Proposal," Policy Briefs 403, Bruegel.
    12. Richard Davies & Belinda Tracey, 2014. "Too Big to Be Efficient? The Impact of Implicit Subsidies on Estimates of Scale Economies for Banks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(s1), pages 219-253, February.
    13. Carlo Favero & Alessandro Missale, 2012. "Sovereign spreads in the eurozone: which prospects for a Eurobond? [Asset pricing with liquidity risk]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 27(70), pages 231-273.
    14. Stijn Claessens & Shahin Vallée, 2012. "Paths to eurobonds," Working Papers 733, Bruegel.
    15. Sergio Mayordomo & Juan Ignacio Peña & Eduardo S. Schwartz, 2009. "Towards a Common European Monetary Union Risk Free Rate," NBER Working Papers 15353, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giovanni Dosi & Marcello Minenna & Andrea Roventini & Roberto Violi, 2021. "Making the Eurozone work: a risk-sharing reform of the European Stability Mechanism," Annals of Operations Research, Springer, vol. 299(1), pages 617-657, April.
    2. Beetsma, Roel & Mavromatis, Kostas, 2014. "An analysis of eurobonds," Journal of International Money and Finance, Elsevier, vol. 45(C), pages 91-111.
    3. 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.
    4. Engwerda, Jacob & van Aarle, Bas & Anevlavis, Tzanis, 2019. "Debt stabilization games in a monetary union: What are the effects of introducing eurobonds?," Journal of Macroeconomics, Elsevier, vol. 59(C), pages 78-102.
    5. Paolo Canofari & Giovanni Bartolomeo & Marcello Messori, 2017. "EMU Stability: Direct and Indirect Risk Sharing," Open Economies Review, Springer, vol. 28(5), pages 847-862, November.
    6. Baglioni Angelo & Cherubini Umberto, 2016. "Eurobonds: A Quantitative Approach," Review of Law & Economics, De Gruyter, vol. 12(3), pages 507-521, November.
    7. Badarau, Cristina & Huart, Florence & Sangaré, Ibrahima, 2021. "Macroeconomic and policy implications of eurobonds," International Review of Law and Economics, Elsevier, vol. 65(C).
    8. Zarko Kalamov & Klaas Staal, 2016. "Public debt, bailouts, and common bonds," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 670-692, August.
    9. Eger, Thomas & Weise, Peter, 2020. "Die Target-Salden in der Eurozone: "Falle" oder Scheinproblem?," Discussion Papers 1/20, Europa-Kolleg Hamburg, Institute for European Integration.
    10. Stijn Claessens & M. Ayhan Kose, 2013. "Financial Crises: Explanations, Types and Implications," CAMA Working Papers 2013-06, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    11. Jörg Bibow, 2013. "Lost at Sea: The Euro Needs a Euro Treasury," IMK Studies 35-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    12. John Armour, 2006. "Should we redistribute in insolvency," Working Papers wp319, Centre for Business Research, University of Cambridge.
    13. Markus K. Brunnermeier & Sam Langfield & Marco Pagano & Ricardo Reis & Stijn Van Nieuwerburgh & Dimitri Vayanos, 2017. "ESBies: safety in the tranches," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 32(90), pages 175-219.
    14. Choudhary, M. Ali & Jain, Anil, 2022. "Finance and inequality: The distributional impacts of bank credit rationing," Journal of Financial Intermediation, Elsevier, vol. 52(C).
    15. Eger Thomas & Schäfer Hans-Bernd, 2016. "Introduction: Eurobonds beyond Crisis Management," Review of Law & Economics, De Gruyter, vol. 12(3), pages 477-494, November.
    16. R. Preston Mcafee & Hugo M. Mialon & Sue H. Mialon, 2010. "Do Sunk Costs Matter?," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 323-336, April.
    17. Dieter Dziadkowski, 2016. "Zur künftigen Steuerbelastung in Deutschland," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(11), pages 27-33, June.
    18. Mehtab Arshad Butt & Haroon Shafi & Kashif-Ur-Rehman & Rana Rashid Rehman & Hafiz Muhammad Shoaib, 2011. "Investor’s Dilemma: Fundamentals or Biasness in Investment Decision," Journal of Economics and Behavioral Studies, AMH International, vol. 3(2), pages 122-127.
    19. Massimo Amato & Everardo Belloni & Paolo Falbo & Lucio Gobbi, 2021. "Europe, public debts, and safe assets: the scope for a European Debt Agency," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 823-861, October.
    20. Ibragimov, Rustam & Walden, Johan, 2007. "The limits of diversification when losses may be large," Scholarly Articles 2624460, Harvard University Department of Economics.

    More about this item

    Keywords

    Eurobonds; euro crisis; law and economics; sovereign debt;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:rlecon:v:12:y:2016:i:3:p:523-553:n:4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.