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The European Redemption Pact. An illustrative guide

Author

Listed:
  • Hasan Doluca
  • Malte Hübner
  • Dominik Rumpf
  • Benjamin Weigert

Abstract

The European Redemption Pact (ERP), a proposal of the German Council of Economic Experts, describes an exit strategy from the debt crisis which currently plagues the euro area. The pact includes a binding commitment of all participating countries to bring public debt ratios below the reference value of 60% within the next 20 to 25 years. To ensure that this objective can be reached with realistic primary balances, participating countries can transfer their excessive debt exceeding the 60% threshold at a certain date, into a redemption fund for which participating member countries are jointly and severally liable. In this technical paper, we describe in detail one possible way of implementing the ERP and the primary balances each country would need to achieve under the proposal. JEL Classification: E40, E43, E44, E47, H62, H63, H68, H77.

Suggested Citation

  • Hasan Doluca & Malte Hübner & Dominik Rumpf & Benjamin Weigert, 2013. "The European Redemption Pact. An illustrative guide," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 341-367.
  • Handle: RePEc:cai:reofsp:reof_127_0341
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    Cited by:

    1. repec:spo:wpecon:info:hdl:2441/eo6779thqgm5r489m6u1i2a0o is not listed on IDEAS
    2. repec:pra:mprapa:42873 is not listed on IDEAS
    3. Fabrizio Balassone & Sandro Momigliano & Marzia Romanelli & Pietro Tommasino, 2014. "Just round the corner? Pros, cons, and implementation issues of a fiscal union for the euro area," Questioni di Economia e Finanza (Occasional Papers) 245, Bank of Italy, Economic Research and International Relations Area.
    4. repec:spo:wpecon:info:hdl:2441/eo6779thqgm5r489maqa474kg is not listed on IDEAS
    5. Catherine Mathieu & Henri Sterdyniak, 2012. "Faut-il des règles de politique budgétaire ?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(7), pages 299-346.
    6. Carmelo Pierpaolo Parello & Vincenzo Visco, 2012. "The European Redemption Fund: A Comparison of Two Proposals," Politica economica, Società editrice il Mulino, issue 3, pages 273-306.
    7. Catherine Mathieu & Henri Sterdyniak, 2013. "Do we need fiscal rules?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 189-233.
    8. repec:voj:journl:v:63:y:2016:i:1:p:61-85 is not listed on IDEAS
    9. Ernesto Longobardi & Antonio Pedone, 2016. "On some recent proposals of public debt restructuring in the Eurozone," SERIES 06-2016, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Sep 2016.
    10. Amtenbrink Fabian & Repasi René & De Haan Jakob, 2016. "Is there Life in the Old Dog Yet? Observations on the Political Economy and Constitutional Viability of Common Debt Issuing in the Euro Area," Review of Law & Economics, De Gruyter, vol. 12(3), pages 605-633, November.
    11. André Grjebine, 2013. "L’Eurosystème: un mécanisme de transferts en faveur des pays déficitaires ? Le débat," Sciences Po publications info:hdl:2441/eo6779thqgm, Sciences Po.

    More about this item

    Keywords

    European Redemption Pact; European debt crisis;

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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