The EU debt crisis: testing and revisiting conventional legal doctrine

Controversies surrounding the European sovereign debt crisis loom prominent in the public debate. From a legal perspective, the no-bailout rule and the ban on monetary financing constitute the main principles governing the legality review of financial assistance and liquidity measures. Interpretatio...n of these rules are full of empirical claims. According to conventional legal doctrine, bond spreads only depend on the country’s debt position, largely ignoring other causal factors including liquidity. We test the hypotheses implicit in conventional legal reasoning. We find evidence that a significant part of the surge in the spreads of the peripheral Eurozone countries was disconnected from underlying fundamentals and particularly from a country’s debt position, and was associated rather strongly with market sentiments and liquidity concerns. We apply our empirical findings to the legal principles as interpreted by recent jurisprudence arguing that application of the no-bailout principle and the ban on monetary financing should be extended to capture non-debt related factors. Also, the empirical results suggest taking recourse to alternative legal grounds for reviewing the legality of anti-crisis instruments and allowing for a lender of last resort in the euro zone. Ausführliche Beschreibung Beschreibung ausblenden

Späterer Titel:	The EU debt crisis: testing and revisiting conventional legal doctrine
Vorheriger Titel:	<<The>> EU debt crisis: testing and revisiting conventional legal doctrine
1. Person:	Grauwe, Paul <<de>>
Weitere Personen:	Ji, Yuemei; Steinbach, Armin
Format:	Sonstiges
Sprache:	English
Veröffentlicht:	Bonn Max Planck Institute for Research on Collective Goods 2016
Beschreibung:	Online Ressource (20 Seiten) Diagramme
Ausgabe:	July 2016
Serien:	Preprints aus dem Max-Planck-Institut zur Erforschung von Gemeinschaftsgütern [Elektronische Ressource]
Schlagworte (STW):	Schulden Schuldenkrise Europa Eurozone Lender of last resort Panel data
Schlagworte (SH):	European sovereign debt crisis, 2009- Debt-to-GDP ratio Labor costs Liquidity (economics) Bailouts (finance) Central credit unions Financial transactions processing > Reserve > Clearinghouse activities
Autorenschlagworte:	Ban on monetary financing Government debt No-bailout clause
Online Zugang:	Volltext
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