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Euro White and Euro Yolk: Sovereign Debt Structure Stability in the Eurozone

Author

Listed:
  • Robert Joliet

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Rabia Nessah

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

Abstract

In this paper, we derive a cost-minimizing approach for governments in the eurozone that have to define their debt structure in terms of currency of issuance and maturity. We introduce and characterize the concept of weighted coalitional αα-equilibrium to assure stability of two tiers of the eurozone, the stronger (White) countries and the weaker (Yolk) countries. The equilibrium presents both the Pareto optimality of the countries in each tier and the stability against any deviation of each subcoalition. In a practical way, it would require either strong political integration within each tier or considerable market pressure.

Suggested Citation

  • Robert Joliet & Rabia Nessah, 2016. "Euro White and Euro Yolk: Sovereign Debt Structure Stability in the Eurozone," Post-Print hal-01533524, HAL.
    • Handle: RePEc:hal:journl:hal-01533524
    DOI: 10.1142/s0219198916500043
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    as
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    More about this item

    Keywords

    Eurozone; sovereign debt; yield spreads; nn-country game; coalition structure; coalitional equilibrium;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F3 - International Economics - - International Finance
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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