American Economic Review: Vol. 104 No. 5 (May 2014)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter

Explore:

AER - All Issues

AER Forthcoming Articles

Is It Too Late to Bail Out the Troubled Countries in the Eurozone?

Article Citation

Conesa, Juan Carlos, and Timothy J. Kehoe. 2014. "Is It Too Late to Bail Out the Troubled Countries in the Eurozone?" American Economic Review, 104(5): 88-93.

DOI: 10.1257/aer.104.5.88

Abstract

In January 1995, US 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.

Article Full-Text Access

Full-text Article

Additional Materials

Authors

Conesa, Juan Carlos (Stony Brook U, SUNY)
Kehoe, Timothy J. (U MN)

JEL Classifications

F33: International Monetary Arrangements and Institutions
H63: National Debt; Debt Management; Sovereign Debt
O47: Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence


American Economic Review


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us