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Redemption

  • Catherine Mathieu

    ()

    (Ofce sciences-po)

  • Henri Sterdyniak

    ()

    (Ofce sciences-po)

The economic crisis which started in 2008 led to a strong rise in public debts. The sovereign debt crisis in euro area southern countries breached the unity of the euro area and weakened the single currency concept. The paper shows that this situation is not due to a lack of fiscal discipline in Europe, but to drifts in financial capitalism and to an inappropriately designed euro area economic policy framework. Public debts homogeneity needs to be resettled in Europe. European public debts should become safe assets again, and should not be subject to financial markets’ assessment.European Member States should not be requested to pay for past sins through austerity measures, and should not strengthen fiscal discipline through rules lacking economic rationale. The paper deals with recent proposals which have been made to improve euro area governance (redemption fund, Eurobonds, public debt guarantee by the ECB). The paper advocates for a full guarantee of government bonds for the Member States who commit to an economic policy coordination process, which should target GDP growth and coordinated reduction of imbalances.

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File URL: http://www.ofce.sciences-po.fr/pdf/dtravail/WP2013-06.pdf
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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2013-06.

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Date of creation: May 2013
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Handle: RePEc:fce:doctra:1306
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  1. Catherine Mathieu & Henri Sterdyniak, 2003. "Réformer le Pacte de stabilité : l’état du débat," Sciences Po publications info:hdl:2441/1783, Sciences Po.
  2. André Sapir & Francois Gianviti & Anne Krueger & Jean Pisani-Ferry & Jürgen von Hagen, 2010. "A European Mechanism for Sovereign Debt Crisis Resolution: A Proposal," ULB Institutional Repository 2013/174280, ULB -- Universite Libre de Bruxelles.
  3. Jérôme Creel & Bruno Ducoudre & Catherine Mathieu & Henri Sterdyniak, 2005. "Doit-on oublier la politique budgétaire? Une analyse critique de la nouvelle théorie anti-keynésienne des finances publiques," Post-Print hal-01020610, HAL.
  4. Catherine Mathieu & Henri Sterdyniak, 2007. "Comment expliquer les disparités économiques dans l'UEM ?," Sciences Po publications info:hdl:2441/5284, Sciences Po.
  5. Catherine Mathieu & Henri Sterdyniak, 2009. "La globalisation financière en crise," Sciences Po publications info:hdl:2441/5l6uh8ogmqi, Sciences Po.
  6. repec:dau:papers:123456789/4777 is not listed on IDEAS
  7. Olivier J. Blanchard & Daniel Leigh, 2013. "Growth Forecast Errors and Fiscal Multipliers," NBER Working Papers 18779, National Bureau of Economic Research, Inc.
  8. Günter Coenen & Christopher J. Erceg & Charles Freedman & Davide Furceri & Michael Kumhof & René Lalonde & Douglas Laxton & Jesper Lindé & Annabelle Mourougane & Dirk Muir & Susanna Mursula & Carlos d, 2012. "Effects of Fiscal Stimulus in Structural Models," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(1), pages 22-68, January.
  9. Hasan Doluca & Malte Hübner & Dominik Rumpf & Benjamin Weigert, 2012. "The European Redemption Pact: Implementation and macroeconomic effects," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 47(4), pages 230-239, July.
  10. repec:spo:wpecon:info:hdl:2441/1769 is not listed on IDEAS
  11. Fabrice Capoen & Henri Sterdyniak & Pierre Villa, 1994. "Indépendance des banques centrales, politiques monétaire et budgétaire : une approche stratégique," Revue de l'OFCE, Programme National Persée, vol. 50(1), pages 65-102.
  12. Thomas I. Palley, 2011. "Monetary Union Stability: The Need for a Government Banker and the Case for a European Public Finance Authority," IMK Working Paper 2-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  13. repec:spo:wpecon:info:hdl:2441/1783 is not listed on IDEAS
  14. Paul De Grauwe, 2012. "A Fragile Eurozone in Search of a Better Governance," The Economic and Social Review, Economic and Social Studies, vol. 43(1), pages 1–30.
  15. repec:spo:wpecon:info:hdl:2441/5284 is not listed on IDEAS
  16. Servaas Deroose & Sven Langedijk & Werner Roeger, 2004. "Reviewing adjustment dynamics in EMU: from overheating to overcooling," European Economy - Economic Papers 2008 - 2015 198, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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