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

Kaushik Basu

Review of Law & Economics, 2016, vol. 12, issue 3, 495-506

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.

Keywords: economics; law; sovereign debt; eurozone crisis (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1515/rle-2016-0040

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