Effects of Eurobonds: a stochastic sovereign debt sustainability analysis for Portugal, Ireland and Greece
Bas van Aarle () and
Jan Van Hove ()
Working Papers Department of Economics from KU Leuven, Faculty of Economics and Business, Department of Economics
This paper assesses the impact of Eurobonds on sovereign debt dynamics for selected European member states (Greece, Ireland and Portugal). For each member state, we produce sovereign debt fan charts of (i) a baseline scenario (no Eurobonds) and (ii) a Full-Fledged Eurobond introduction. The key building blocks of our methodology are (i) a debt framework (which embeds the traditional recursive debt equation), (ii) a vector autoregressive model to take into account and parametrise macroeconomic uncertainty and (iii) a fiscal reaction function. Conditional on the absence of moral hazard, we find Eurobonds to be a good instrument to absorb macroeconomic shocks and to diminish uncertainty over future debt forecasts; for Ireland and Portugal, we find debt to be 20 percentage points lower than under our baseline scenario, by 2020.
New Economics Papers: this item is included in nep-eec
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Journal Article: Effects of Eurobonds: A stochastic sovereign debt sustainability analysis for Portugal, Ireland and Greece (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces14.10
Access Statistics for this paper
More papers in Working Papers Department of Economics from KU Leuven, Faculty of Economics and Business, Department of Economics
Bibliographic data for series maintained by library EBIB ().