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The european redemption fund: a comparison of two proposals

Author

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  • Parello, Carmelo Pierpaolo
  • Visco, Vincenzo

Abstract

This paper proposes a redemption fund for the euro zone countries alternative to that recently proposed by Doluca et al. (2012) – The European Redemption Pact: an Illustrative Guide, GCEE Working Paper No.2, February – and in coherence with a previous proposal of one of the author. In doing so, we envisage a country-specific amortization scheme in which the sovereign debts exceeding the 60% ceiling of GDP is redeemed in 30 years. The paper shows that our redemption scheme is cheaper and less constraining than that proposed by Doluca et al. (2012). Also, our paper shows that fiscal “brakes” – such as those required by the Fiscal Compact – are not necessary for the complete redemption of the Fund.

Suggested Citation

  • Parello, Carmelo Pierpaolo & Visco, Vincenzo, 2012. "The european redemption fund: a comparison of two proposals," MPRA Paper 42874, University Library of Munich, Germany, revised 26 Nov 2012.
  • Handle: RePEc:pra:mprapa:42874
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    References listed on IDEAS

    as
    1. 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.
    2. Carmen M. Reinhart & M. Belen Sbrancia1, 2015. "The liquidation of government debt," Economic Policy, CEPR;CES;MSH, vol. 30(82), pages 291-333.
    3. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Fabrizio Balassone & Sara Cecchetti & Martina Cecioni & Marika Cioffi & Wanda Cornacchia & Flavia Corneli & Gabriele Semeraro, 2016. "Economic governance in the euro area: balancing risk reduction and risk sharing," Questioni di Economia e Finanza (Occasional Papers) 344, Bank of Italy, Economic Research and International Relations Area.
    2. Gustav A. Horn & Alexander Herzog-Stein & Ansgar Rannenberg & Katja Rietzler & Silke Tober & Peter Hohlfeld & Fabian Lindner & Sabine Stephan, 2013. "Krise überwunden? Prognose der wirtschaftlichen Entwicklung 2013/2014," IMK Report 86-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    3. Silke Tober, 2014. "Debt Redemption Fund: Conditio Sine Qua Non? Government Bonds in the Euro Area Crisis," IMK Working Paper 131-2014, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Silke Tober, 2015. "Monetary Financing in the Euro Area: A Free Lunch?," IMK Working Paper 152-2015, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    5. Xavier Timbeau, 2014. "From austerity to stagnation how to avoid the deflation trap: The independant annual growth survey 2014," Sciences Po publications info:hdl:2441/c5gs2rgi93a, Sciences Po.
    6. Gustav A. Horn & Alexander Herzog-Stein & Peter Hohlfeld & Fabian Lindner & Ansgar Rannenberg & Katja Rietzler & Sabine Stephan & Silke Tober, 2014. "Deutschland im Aufschwung - Risiken bleiben," IMK Report 91-2014, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    Keywords

    Sovereign debt crisis; Public debt; Amortization schedule; European redemption fund;

    JEL classification:

    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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