Euro Area Sovereign Debt Crisis and Debt Mutualisation

ISEG Economics Department Working Paper No. WP xx/2016/DE/UECE

36 Pages Posted: 29 Feb 2016

See all articles by António Afonso

António Afonso

University of Lisbon - ISEG (School of Economics and Management); UECE (Research Unit on Complexity and Economics); ISEG Lisbon School of Economics and Management,Universidade de Lisboa

Marcelo Alcântara

University of Lisbon - School of Economics and Management

Date Written: February 9, 2016

Abstract

We study debt mutualisation in the Euro area. Bearing in mind other existing proposals we provide an alternative Blue, Yellow and Red Bonds proposal: blue, would cover debt up to 60% of GDP, yellow would include debt from 60% up to 90% of GDP, and red would cover debt above 90% of GDP. Although not with joint liability, the rationale behind the Yellow Bonds with a joint issuance is the attraction of liquidity, which would be beneficial, especially for the countries with high yields. This could give more room to public authorities.

Keywords: EMU, Euro area crisis, sovereign yields, government debt, debt mutualisation

JEL Classification: F45, H12, H20, H63

Suggested Citation

Afonso, António and Alcântara, Marcelo, Euro Area Sovereign Debt Crisis and Debt Mutualisation (February 9, 2016). ISEG Economics Department Working Paper No. WP xx/2016/DE/UECE, Available at SSRN: https://ssrn.com/abstract=2729895

António Afonso (Contact Author)

University of Lisbon - ISEG (School of Economics and Management) ( email )

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal
+351 21 392 5985 (Phone)
+351 21 396 6407 (Fax)

HOME PAGE: http://https://www.iseg.ulisboa.pt/aquila/homepage/aafonso

UECE (Research Unit on Complexity and Economics)

Rua Miguel Lupi 20
Lisbon, 1249-078
Portugal
+351-213 925 912 (Phone)
+351-213 971 196 (Fax)

HOME PAGE: http://https://uece.rc.iseg.ulisboa.pt/

ISEG Lisbon School of Economics and Management,Universidade de Lisboa ( email )

Rua do Quelhas 6
LISBOA, 1200-781
Portugal

Marcelo Alcântara

University of Lisbon - School of Economics and Management ( email )

Rua do Quelhas, n.º 6
Lisbon, 1200-781
Portugal

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