Suchergebnisse

Contents: Preface -- Part I: Public debt and individual rationality -- 1. De Viti de Marco vs. Ricardo on public debt: self-extinction or default? / Giuseppe Eusepi and Richard E. Wagner -- 2. Governing the market for sovereign bailouts / Karsten Mause -- 3. Political obligations: is debt special? / Geoffrey Brennan -- 4. Debt default and the limits of the contractual imagination: Pareto and Mosca meet Buchanan / Richard E. Wagner -- Part II: Macro consequences and implications of public debt -- 5. Political economy of government solvency: the institutional framework for stability and sustainability / Andrea Rieck and Ludger Schuknecht -- 6. On some recent proposals of public debt restructuring in the Eurozone / Ernesto Longobardi and Antonio Pedone -- 7. Economic governance in the Euro area: balancing risk reduction and risk sharing / Fabrizio Balassone, Sara Cecchetti, Martina Cecioni, Marika Cioffi, Wanda Cornacchia, Flavia Corneli and Gabriele Semeraro -- 8. Adjustments in the balance sheets - is it normal, this "new normal"? / Liviu Voinea, Alexie Alupoaiei, Florin Dragu and Florian Neagu -- Index.

Why are sovereign debt defaults so persistent in some EMEs, even at relatively low levels of external debt? The empirical literature has argued that the country s record of defaults is the main determinant of the future default risk. However, there are two factors generating the e¤ect from history on the probability of default: state dependence and unobserved heterogeneity. Is a country more likely to default because it has experienced a default in the past (state dependence) or does the country have some previous speci c characteristics that make it more prone to default (unobserved heterogeneity)? Results indicate that state dependence e¤ects are large. Nevertheless, this paper presents evidence indicating that the omission of unobserved heterogeneity -which accounts for both unobserved and observed time invariant characteristics- has drastic consequences when assessing countries risk of default. When unobserved het- erogeneity is accounted for there are countries with high risk of default even if negligible levels of debt are assigned to them. Conversely, other countries show a low probability of default even with assigned levels of indebtedness higher than those observed in the sample. Finally, this paper presents evidence suggesting that unobserved heterogeneity could be associated to a set of di¤erent historical, political, and cultural factors that have deeply and persistently shaped institutions.