We investigate how “news” affected domestic interest spreads vis-à-vis Germany and how it propagated to other countries during the recent crisis period, thereby distinguishing between the so-called GIIPS countries and other European countries. We make original use of the Eurointelligence...

Currencies can be under severe pressure, but in a managed exchange rate regime that is not fully visible via the change in the exchange rate. The literature has proposed a way to measure such exchange market pressure (EMP) indirectly, by adding interest rate changes and forex interventions to...

We analyse different forms of debt mutualisation in a union of countries. One country suffers from a political distortion and may resort to (partial) debt default. We consider a debt repayment guarantee, which can be “unlimited” or ”limited”, i.e. only be invoked when the guarantee...