This paper argues that in Euro-area economies, where the ECB cannot bail-out financially distressed governments, the fiscal multiplier is adversely affected by the amount of public debt. A regression model on a panel of 26 EU countries over the period 1996-2011 shows that a 10 percentage point...

Euro candidates are expected to maintain the value of their currency within the fluctuation band of the new exchange rate mechanism for at least two years. This paper highlights some unpleasant macroeconomic effects that could occur during this interval. The problem is cast as a two-stage...

When governments loose investors' confidence, additional public spending and the resulting increase in public debt would push-up risk-adjusted interest rates in a more aggressive way. A regression model on a panel of 26 EU countries over the period 1996-2011 shows that a 10 percentage point...