Economics, Econometrics and Finance
8 years ago

Euro area needs debt restructuring to break economic stasis and promote growth.

1 view
Sovereign debt and its restructuring framework in the Euro area. Bruegel Working Paper 2013/05, August 2013
Ashoka Mody

Paper Summary

The Euro area needs a system for restructuring debt to deal with fixed exchange rates. Austerity hasn't reduced public debt much and has hurt growth. Debt restructuring should be automatic when certain thresholds are breached, making debt more like equity. This approach can help with private debt reduction and deal with existing debt burdens.

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