This paper assesses the consequences of implementing a joint liability debt system in a two-country small open economy model. With joint liability a default of one country makes the other participant liable for its debt. The results highlight a trade-off between the contagion risk, in the sense that this instrument may push some member states to default even though they are individually solvent, and cheaper access to credit on average, since lenders...
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INFORMATION
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2019/09/16
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Document de travail de recherche sur les politiques
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WPS9017
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1
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1
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2019/09/16
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Disclosed
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Eurobonds : A Quantitative Analysis of Joint-Liability Debt
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Eurobond
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