Euro Area Sovereign Debt Crisis and Debt Mutualisation

Antonio Afonso and Marcelo Alcântara

No 2016/07, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

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. Key Words : EMU, Euro area crisis, sovereign yields, government debt, debt mutualisation.

JEL-codes: F45 H12 H20 H63 (search for similar items in EconPapers)
Date: 2016-02
New Economics Papers: this item is included in nep-eec
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Citations: View citations in EconPapers (1)

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