Resolving the European Debt Crisis

Resolving the European Debt Crisis

by William R. Cline
     
 

ISBN-10: 0881326429

ISBN-13: 2900881326429

Pub. Date: 03/15/2012

Publisher: Peterson Institute for International Economics

Resolving the European Debt Crisis

What began as a relatively localized crisis in Greece in early 2010 soon escalated to envelop Ireland and Portugal. By the second half of 2011, the contagion had spread to the far larger economies of Italy and Spain. In mid-September the Peterson Institute and Bruegel hosted a conference designed to contribute to the formulation

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Overview

Resolving the European Debt Crisis

What began as a relatively localized crisis in Greece in early 2010 soon escalated to envelop Ireland and Portugal. By the second half of 2011, the contagion had spread to the far larger economies of Italy and Spain. In mid-September the Peterson Institute and Bruegel hosted a conference designed to contribute to the formulation of policies that could help resolve the euro area debt crisis. This volume presents the conference papers; several are updated through end-2011.

European experts examine the political context in Greece (Loukas Tsoukalis), Ireland (Alan Ahearne), Portugal (Pedro Lourtie), Spain (Guillermo de la Dehesa), Italy (Riccardo Perissich), Germany (Daniela Schwarzer), and France (Zaki Laüdi). Lessons from past debt restructurings are then examined by Jeromin Zettelmeyer (economic) and Lee Buchheit (legal). The two editors separately consider the main current policy issues: debt sustainability by country, private sector involvement and contagion, alternative restructuring approaches, how to assemble a large emergency financing capacity, whether the European Central Bank (ECB) should be a lender of last resort, whether joint-liability "eurobonds" would be feasible and desirable, and the implications of a possible break-up of the euro area. The luncheon address by George Soros and a description (by Steven R. Weisman with Silvia B. Merler) of the policy simulation game played on the second day of the conference complete the volume. Involving market participants and experts representing the roles of euro area governments, the ECB, IMF, G-7, and credit rating agencies, the game led to a proposal for leveraging the capacity of the European Financial Stability Facility through arrangements with the ECB.

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Product Details

ISBN-13:
2900881326429
Publisher:
Peterson Institute for International Economics
Publication date:
03/15/2012
Pages:
293

Table of Contents

Preface v

1 Overview William R. Cline Guritram B. Wolff 1

I Political-Economic Environments

2 Greece in the Euro Area: Odd Man Out, or Precursor of Things to Come Loukas Tsoukalis 19

3 Political-Economic Context in Ireland Alan Aheame 37

4 Understanding Portugal in the Context of the Euro Crisis Pedro Lourtie 51

5 Italy and the Euro Crisis Riccardo Perissich 95

6 Spain and the Euro Area Sovereign Debt Crisis Guillermo de la Dehesa 109

7 France, the State, and Globalization Zaki Laïdi 131

8 The Political Economy of Germany in the Sovereign Debt Crisis Daniela Schwarzer 143

II Lessons from Past Debt Crises

9 How to Do a Sovereign Debt Restructuring in the Euro Area: Lessons from Emerging-Market Debt Crises Jeromin Zettelmeyer 165

10 Sovereign Debt Restructuring: The Legal Context Lee Buchheit 187

III Pros and Cons of Alternative Policy Options

11 Alternative Strategies for Resolving the European Debt Crisis William R. Cline 197

12 The Euro Area Crisis: Policy Options Ahead Guntram B. Wolff 235

13 Comments on Policy Strategies Gertrude Tumpel-Gugerell Rodrigo de Rato 253

14 Does the Euro Have a Future? George Soros 257

IV Policy Simulation Game

15 The Simulation Exercise: A Real Time Economic and Political Stress Test Steven R Weisman Silvia B. Merler 265

About the Contributors 275

Index 281

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