Cyprus, Greece, Ireland, Portugal and Spain, ranging from roughly 0.5% (Ireland) to 43% (Greece) of 2011 output during the … recent Eurozone crisis. We propose a model to analyze and understand bailouts in a monetary union, and the large observed … activity, debt-to-gdp ratio, default costs). Our model embeds a ‘Southern view’ of the crisis (transfers did not help) and a …

incentives. We then apply our framework to the European debt crisis. We show that matching the cyclicality of public debt …

. Calibrated to Eurozone data, the model is consistent with key long-run and debt-crisis statistics. Defaults are rare (1.2 percent …

The recent financial crisis 2007-2009 was the longest and the deepest recession since the Great Depression of 1930. The … crisis that originated in subprime mortgage markets was spread and amplified through globalised financial markets and … insufficient means to halt the spiral of European debt crisis. In particular, no pan-European fiscal mechanism to face a global …

lending. We test the model in the context of the Eurozone sovereign crisis, which escalated in the second half of 2011 and …

crisis erupted and pushed them into deep recessions, raising their deficits and debt levels. By 2010, they were facing severe …

Europe's debt crisis resembles historical episodes of outright default on domestic public debt about which little …