Greece is standing at a crossroads. The need for a third rescue package has now become a critical issue. The Greek government is calling for another de facto-public debt restructuring. An alternative option presented here would be to convert existing GLF loans into GDP-linked loans. Interest payments would then be linked to the development of Greece’s GDP. First, this would reduce the likelihood of ...
This paper provides a study of bond yield differentials among EU government bonds on the basis of a unique data set of issue spreads in the US and DM (Euro) bond market between 1993 and 2009. Interest differentials between bonds issued by EU countries and Germany or the USA contain risk premiums which increase with fiscal imbalances and depend negatively on the issuer's relative bond market size. The ...
Seit vier Jahren kämpfen die Staaten des Euroraums gegen die Hinterlassenschaften der schweren Finanz- und Wirtschaftskrise an. Aber noch immer steigen die Schuldenquoten. Für die Krisenstaaten des Euroraums wurde zwar mit Rettungspaketen und Niedrigzinsen "Zeit erkauft". Aber solange sich die anderen Einflussgrößen nicht positiver entwickeln, bleibt es ungewiss, ob die momentane Beruhigung der Euro-Verschuldungskrise ...
Member states of the euro area have been struggling with the legacies of the severe financial and economic crisis for four years now. But debt ratios are still rising. Negative primary balances, low growth, and low inflation do not allow for a recovery similar to the one in the US after the Second World War. Between 1946 and 1953, the US was able to almost halve its debt with no haircuts. The crisis ...
This paper studies the impact of credit rating agency (CRA) announcements on the value of the Euro and the yields of French, Italian, German and Spanish long-term sovereign bonds during the culmination of the Eurozone debt crisis in 2011-2012. The employed GARCH models show that CRA downgrade announcements negatively affected the value of the Euro currency and also increased its volatility. Downgrading ...