Sovereign Debt and Joint Liability

An Economic Theory Model for Amending the Treaty of Lisbon

Datos Bibliográficos

ID9707718
AutoresKaushik Basu (0000-0002-3705-055X, The World Bank and Cornell University), Joseph E Stiglitz (0000-0001-6149-046X, Columbia University)
Año2015
Volumen125
Número586
PáginasF115-F130
Fecha de publicación2015-08-01
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaThe Economic Journal (JOURNAL)
Identificadores de la revistaISSN: 0013-0133 • E-ISSN: 1468-0297
EditorialOxford University Press (OUP) (PUBLISHER)
DOI10.1111/ecoj.12300
OpenAlexW2158211639
IdiomaEN
Citas recibidas2
Referencias citadas21

As the euro area crisis drags on, it is evident that a part of the problem lies in the architecture of debt within the euro area. This study argues that at least part of the debt problem could be addressed through limited cooperative action entailing appropriately structured contracts generating cross‐country liability for sovereign debt incurred by individual nations within the European Union. Such agreements are currently proscribed by the Treaty of Lisbon. We construct a game‐theoretic model demonstrating that there exist self‐fulfilling equilibria, which are Pareto superior to the existing outcome and which would come into existence if cross‐country debt liabilities were permitted

Debt · Economics · Joint and several liability · Law and economics · Liability · Macroeconomics · Political science · Sovereign debt · Sovereignty · Strict liability · Treaty · Accounting · Fiscal Policies and Political Economy · Global Financial Crisis and Policies · Law · Local Government Finance and Decentralization