Year: 2014
Author: Bank, Matthias, Kupfer, Alexander, Sendlhofer, Rupert
Credit and Capital Markets – Kredit und Kapital, Vol. 47 (2014), Iss. 1 : pp. 79–101
Abstract
Steadily growing debt ratios indicate that current sovereign debt policy lacks important incentives for governments and politicians to fulfill it in a long-term sustainable way. To implement proper incentives, we propose the concept of performance-sensitive government bonds (PSGB) where coupon payments are closely linked to debt policy, giving strong incentives to limit debt levels and to timely restructure the economy. In addition, we show that the current mechanisms used to solve sovereign debt problems within the EMU are not only missing the right incentives but also setting the wrong ones.
Journal Article Details
Publisher Name: Global Science Press
Language: English
DOI: https://doi.org/10.3790/ccm.47.1.79
Credit and Capital Markets – Kredit und Kapital, Vol. 47 (2014), Iss. 1 : pp. 79–101
Published online: 2014-03
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 23
Keywords: G12 G13 H62 H63 Sovereign debt policy government bond incentive contingent debt EMU