Is It Too Late to Bail Out the Troubled Countries in the Eurozone? / Juan Carlos Conesa, Timothy J. Kehoe.

Format:

Book

Author/Creator:

Conesa, Juan Carlos.

Contributor:

National Bureau of Economic Research.

Kehoe, Timothy J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19909.

NBER working paper series no. w19909

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

In January 1995, U.S. President Bill Clinton organized a bailout for Mexico that imposed penalty interest rates and induced the Mexican government to reduce its debt, ending the debt crisis. Can the Troika (European Commission, European Central Bank, and International Monetary Fund) organize similar bailouts for the troubled countries in the Eurozone? Our analysis suggests that debt levels are so high that bailouts with penalty interest rates could induce the Eurozone governments to default rather than reduce their debt. A resumption of economic growth is one of the few ways that the Eurozone crises can end.

Notes:

Print version record

February 2014.