Stimulus vs. Austerity vs. Default

Gabriel Cuadra and Manuel Ramos Francia

No 2014-10, Working Papers from Banco de México

Abstract: There is an ongoing debate about austerity and stimulus in the Euro zone. Moreover, given the fiscal and financial problems in the region, a default has appeared likely at times. In this context, this paper develops a dynamic stochastic quantitative model of sovereign default with fiscal policy, which captures the most salient features of the recent fiscal and debt situation in the Euro zone. In this setting, this highlights the economic nature of the decision to default, the key role of official aid in avoiding such event and, thus, improving the overall economic outlook.

JEL-codes: E62 F34 (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.banxico.org.mx/publications-and-press/ ... -981D993F1DAF%7D.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bdm:wpaper:2014-10

Access Statistics for this paper

More papers in Working Papers from Banco de México Contact information at EDIRC.
Bibliographic data for series maintained by Subgerencia de desarrollo de sistemas ().