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What will eurobonds cost?

Author

Listed:
  • Tim Oliver Berg
  • Kai Carstensen
  • Hans-Werner Sinn

Abstract

From the perspective of the euro area countries with low credit ratings, the call for eurobonds is understandable since the associated nominal interest-rate convergence would result in a significant fall in the interest rates of the troubled countries. In return, Germany could expect significantly higher interest costs than before if in future it were to issue eurobonds instead of German government bonds. In light of the expected additional costs the Ifo Institute advises against the introduction of eurobonds.

Suggested Citation

  • Tim Oliver Berg & Kai Carstensen & Hans-Werner Sinn, 2011. "What will eurobonds cost?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(17), pages 25-33, September.
    • Handle: RePEc:ces:ifosdt:v:64:y:2011:i:17:p:25-33
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    File URL: https://www.ifo.de/DocDL/ifosd_2011_17_4.pdf
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    References listed on IDEAS

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    1. Christian Aßmann & Jens Boysen-Hogrefe, 2012. "Determinants of government bond spreads in the euro area: in good times as in bad," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(3), pages 341-356, August.
    2. Giancarlo Corsetti & Keith Kuester & Andre Meier & Gernot J. Müller, 2011. "Soverign risk and the effects of fiscal retrenchment in deep recessions," Working Papers 11-43, Federal Reserve Bank of Philadelphia.
    3. Favero, Carlo & Pagano, Marco & von Thadden, Ernst-Ludwig, 2010. "How Does Liquidity Affect Government Bond Yields?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 45(1), pages 107-134, February.
    4. Amihud, Yakov & Mendelson, Haim, 1991. "Liquidity, Maturity, and the Yields on U.S. Treasury Securities," Journal of Finance, American Finance Association, vol. 46(4), pages 1411-1425, September.
    5. Hans-Werner Sinn & Kai Carstensen, 2010. "Ein Krisenmechanismus für die Eurozone," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 63, pages 01-17, November.
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    Citations

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    Cited by:

    1. Georg Erber, 2012. "Eurobonds and Transfer Payments within the Eurozone," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65(01), pages 14-19, January.
    2. Manasa Gopal & Markus Pasche, 2012. "Market-based Eurobonds Without Cross-Subsidisation," Global Financial Markets Working Paper Series 2012-37, Friedrich-Schiller-University Jena.
    3. Tielens, J. & van Aarle, B. & Van Hove, J., 2014. "Effects of Eurobonds: A stochastic sovereign debt sustainability analysis for Portugal, Ireland and Greece," Journal of Macroeconomics, Elsevier, vol. 42(C), pages 156-173.
    4. Marek Loužek, 2015. "Eurozone Crisis," Prague Economic Papers, Prague University of Economics and Business, vol. 2015(1), pages 88-104.
    5. Martin Schütte & Nicholas Blanchard & Michael Hüther & Bernd Lucke, 2012. "Eurobonds: Can a Division into "Blue Bonds" and "Red Bonds" Minimize the Risk for Euro Countries?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65(04), pages 03-15, February.
    6. Projektgruppe Gemeinschaftsdiagnose, 2011. "Joint Economic Forecast – Autumn 2011: Economic Upswing in Germany – Adverse Effects on the German Economy from the European Debt Crisis," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(20), pages 03-71, October.
    7. Hans-Werner Sinn, 2012. "Die Target-Kredite der Deutschen Bundesbank," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65, pages 03-34, March.
    8. Charles B. Blankart & Peter Spahn & Henrik Enderlein & Sebastian Hauptmeier & Fédéric Holm-Hadulla & Max Otte, 2012. "EU Summit: Can a Fiscal Union Save the Euro?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65(03), pages 03-20, February.

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    More about this item

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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