Deadly Embrace: Sovereign and Financial Balance Sheets Doom Loops / Emmanuel Farhi, Jean Tirole.

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Farhi, Emmanuel

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w21843.Publication details: Cambridge, Mass. National Bureau of Economic Research 2016.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: The recent unravelling of the Eurozone's financial integration raised concerns about feedback loops between sovereign and banking insolvency. This paper provides a theory of the feedback loop that allows for both domestic bailouts of the banking system and sovereign debt forgiveness by international creditors or solidarity by other countries. Our theory has important implications for the re-nationalization of sovereign debt, macroprudential regulation, and the rationale for banking unions.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w21843 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w21840 The Interaction and Sequencing of Policy Reforms /	nber w21841 Human Capital Investment, Inequality and Economic Growth /	nber w21842 Using Split Samples to Improve Inference about Causal Effects /	nber w21843 Deadly Embrace: Sovereign and Financial Balance Sheets Doom Loops /	nber w21844 The Global Diffusion of Ideas /	nber w21845 The Decline in the Nutritional Status of the U.S. Antebellum Population at the Onset of Modern Economic Growth /	nber w21846 The Incidence of Mandated Health Insurance: Evidence from the Affordable Care Act Dependent Care Mandate /	Next

January 2016.

The recent unravelling of the Eurozone's financial integration raised concerns about feedback loops between sovereign and banking insolvency. This paper provides a theory of the feedback loop that allows for both domestic bailouts of the banking system and sovereign debt forgiveness by international creditors or solidarity by other countries. Our theory has important implications for the re-nationalization of sovereign debt, macroprudential regulation, and the rationale for banking unions.