The aim of the study is to estimate the magnitude of the Balassa-Samuleson effect as well as the effectiveness of the labour and the product market in its absorption in Poland, the Czech Republic, Hungary and Slovakia. The obtained results allowed to determine the magnitude of the systematic component of inflation differentials relative to the euro area, hence to assess the risk of common monetary policy inadequacy with respect to these economies. The obtained estimates suggest that the catching-up driven inflationary pressure is a non-negligible issue in the context of the CEECs integration with the euro area, since the systematic inflation differentials were comparable in size to those experienced by the so-called peripheral member states in the first decade after the introduction of the euro. Moreover, in the case of Poland none of the potential absorption mechanisms of the Balassa-Samuelson effect seemed to mitigate the convergence-induced inflationary pressure over the sample period. The outcomes suggest that ignoring the non-fulfilment of theoretical model assumptions regarding wages and markups, which is common in the literature, distorts estimation results.
{"title":"The Balassa-Samuelson Effect and the Channels of its Absorption in the Central and Eastern European Countries","authors":"Karolina Konopczak","doi":"10.2139/ssrn.2361415","DOIUrl":"https://doi.org/10.2139/ssrn.2361415","url":null,"abstract":"The aim of the study is to estimate the magnitude of the Balassa-Samuleson effect as well as the effectiveness of the labour and the product market in its absorption in Poland, the Czech Republic, Hungary and Slovakia. The obtained results allowed to determine the magnitude of the systematic component of inflation differentials relative to the euro area, hence to assess the risk of common monetary policy inadequacy with respect to these economies. The obtained estimates suggest that the catching-up driven inflationary pressure is a non-negligible issue in the context of the CEECs integration with the euro area, since the systematic inflation differentials were comparable in size to those experienced by the so-called peripheral member states in the first decade after the introduction of the euro. Moreover, in the case of Poland none of the potential absorption mechanisms of the Balassa-Samuelson effect seemed to mitigate the convergence-induced inflationary pressure over the sample period. The outcomes suggest that ignoring the non-fulfilment of theoretical model assumptions regarding wages and markups, which is common in the literature, distorts estimation results.","PeriodicalId":269683,"journal":{"name":"PSN: Regional Monetary Union (Topic)","volume":"80 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120838022","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The massive crisis lingering in the Eurozone for almost 4 years now has been confronted by an enhanced integration of fiscal policies and regulations, an increase in the control mechanisms by EU institutions, and by the creation of ex post crisis management instruments to deal with the severe financial trouble of the sovereigns. These ex-post instruments, embodied in the European Stability Mechanism (ESM) and regulated in its Treaty of creation (TESM), constitute a limited solution to the problems posed by the distress of the Eurozone countries. It is the present article’s purpose to examine to which degree, if at all, this mechanism is reconcilable with a more ambitious approach, that includes a more elaborated and structured procedure: the Resolvency Model. Accordingly, we begin by contextualizing the current institutional setting of the Eurozone´s Crisis Management Framework and briefly summarizing the main characteristics of the ESM. Once the description of the current situation shows us where we stand, we purport to explain the Resolvency model in some detail. In this context, we will try to spot the parallelisms and differences between the two approaches in order to examine if there are possibilities to reconcile the two of them. The task is carried out not as a mere intellectual exercise but with an eye on the practical feasibility – in particular with respect to an amalgamation of the two approaches. We believe that the ESM and the Resolvency system are complementary in an important number of tasks and competences. However, we do not consider the current ESM model, as a stand-alone solution, to be fully adequate. We conclude that many of the ESM’s shortcomings would be solved by the introduction of the Resolvency model. One of the main problems of the current ESM system is its excessive exposure to political influence. Be it by means of the adoption of a Resolvency model, or by any other set of amendments, the ESM ought to be transformed into a technical instrument to enhance the efficient development of the Eurozone as a whole, stripped of political influence and the individual interest of countries.
{"title":"Sweet and Lowdown: A Resolvency Process and the Eurozone’s Crisis Management Framework","authors":"C. Paulus, Ignacio Tirado","doi":"10.2139/ssrn.2330423","DOIUrl":"https://doi.org/10.2139/ssrn.2330423","url":null,"abstract":"The massive crisis lingering in the Eurozone for almost 4 years now has been confronted by an enhanced integration of fiscal policies and regulations, an increase in the control mechanisms by EU institutions, and by the creation of ex post crisis management instruments to deal with the severe financial trouble of the sovereigns. These ex-post instruments, embodied in the European Stability Mechanism (ESM) and regulated in its Treaty of creation (TESM), constitute a limited solution to the problems posed by the distress of the Eurozone countries. It is the present article’s purpose to examine to which degree, if at all, this mechanism is reconcilable with a more ambitious approach, that includes a more elaborated and structured procedure: the Resolvency Model. Accordingly, we begin by contextualizing the current institutional setting of the Eurozone´s Crisis Management Framework and briefly summarizing the main characteristics of the ESM. Once the description of the current situation shows us where we stand, we purport to explain the Resolvency model in some detail. In this context, we will try to spot the parallelisms and differences between the two approaches in order to examine if there are possibilities to reconcile the two of them. The task is carried out not as a mere intellectual exercise but with an eye on the practical feasibility – in particular with respect to an amalgamation of the two approaches. We believe that the ESM and the Resolvency system are complementary in an important number of tasks and competences. However, we do not consider the current ESM model, as a stand-alone solution, to be fully adequate. We conclude that many of the ESM’s shortcomings would be solved by the introduction of the Resolvency model. One of the main problems of the current ESM system is its excessive exposure to political influence. Be it by means of the adoption of a Resolvency model, or by any other set of amendments, the ESM ought to be transformed into a technical instrument to enhance the efficient development of the Eurozone as a whole, stripped of political influence and the individual interest of countries.","PeriodicalId":269683,"journal":{"name":"PSN: Regional Monetary Union (Topic)","volume":"61 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-09-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126275599","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper applies counter-factual simulation experiments based on a calibrated DSGE model of a small open-economy. We compare the alternative monetary regimes of East Asia: the monetary targeting framework of the Central Bank of the Republic of China, the fixed-rate system practiced in Hong Kong, the Taylor rule used in Korea, and the exchange-rate management policy used in Singapore. The welfare differences are minimal, but the monetary rule of Taiwan delivers significantly lower share market volatility for a variety of shocks.
{"title":"Monetary Regimes and Share Price Volatility in East Asia","authors":"Yu-Ning Hwang, P. McNelis","doi":"10.2139/ssrn.2208641","DOIUrl":"https://doi.org/10.2139/ssrn.2208641","url":null,"abstract":"This paper applies counter-factual simulation experiments based on a calibrated DSGE model of a small open-economy. We compare the alternative monetary regimes of East Asia: the monetary targeting framework of the Central Bank of the Republic of China, the fixed-rate system practiced in Hong Kong, the Taylor rule used in Korea, and the exchange-rate management policy used in Singapore. The welfare differences are minimal, but the monetary rule of Taiwan delivers significantly lower share market volatility for a variety of shocks.","PeriodicalId":269683,"journal":{"name":"PSN: Regional Monetary Union (Topic)","volume":"37 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-09-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130278222","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper explores the extent to which current reforms of the euro-zone’s governance remain encased in the constraints of the Maastricht Treaty - the narrowness of its underlying paradigm; the gaps and imbalances of its design – and the implications for the future of the euro. With a model of ‘sound money, sound finances’, based on the precepts of German ordo-liberalism, a vulnerability was exposed: it lacked the instruments, not only to aid, but also to police. This was exacerbated by the shallowness of public legitimation, ignored from the outset. The uncertainty, delays and division displayed by the euro-zone’s response to the crisis owed much to the ‘lock-in’ of Maastricht. The paper includes a critical reassessment of Dyson and Featherstone (1999).
{"title":"Le Choc de la Nouvelle? Maastricht, Déjà Vu and EMU Reform (The Shock of the 'New': Maastricht, Path-Dependency and EMU Reform)","authors":"Kevin Featherstone","doi":"10.2139/ssrn.2157129","DOIUrl":"https://doi.org/10.2139/ssrn.2157129","url":null,"abstract":"This paper explores the extent to which current reforms of the euro-zone’s governance remain encased in the constraints of the Maastricht Treaty - the narrowness of its underlying paradigm; the gaps and imbalances of its design – and the implications for the future of the euro. With a model of ‘sound money, sound finances’, based on the precepts of German ordo-liberalism, a vulnerability was exposed: it lacked the instruments, not only to aid, but also to police. This was exacerbated by the shallowness of public legitimation, ignored from the outset. The uncertainty, delays and division displayed by the euro-zone’s response to the crisis owed much to the ‘lock-in’ of Maastricht. The paper includes a critical reassessment of Dyson and Featherstone (1999).","PeriodicalId":269683,"journal":{"name":"PSN: Regional Monetary Union (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128941202","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2012-03-01DOI: 10.15388/EKON.2012.0.888
J. Czaja, A. Dulkys
Usually, euroization is connected with the necessity of passing through not easy to fulfil and to maintain the Maastricht Treaty criteria and to accept (a) priori a definite course of resigning from the national currency. Upon fulfilling the required adjustment periods of euro adoption, the European law forces a total departure from the national currency. This process is subjected to a solid supervision and control of the EU organs. Additionally, the Maastricht Treaty obliges to introduce the euro when a country is in a good economic condition, confirmed by the fulfilment of nominal convergence criteria. In such a situation, the common currency adoption must be (or should be) always interpreted as a proof of a stable economic development and abilities of keeping such parameters in the future. However, in case of euroization accomplished with omission (or even with infringing) the Treaty, there is no necessity of complementing any European law duties, and especially there is no obligation of totally resigning the national currency. Such kind of euro adoption means not a full but a partial euroization, which can appear in a very difficult situation in country`s economy or when currency independence is not safe and profitable. Resignation from the national currency is like an act of desperation, or at least it is forced by the lack of the abilities to manage the economic problems. The purpose of this publication is to show euroization as state (partly also as process), particularly on the examples of Lithuania and Poland. It obviously it does not seem new, but many changes in the world economy (with special regard to the crisis hurting the European Union) and the lower enthusiasm for joining the Euroland (euro zone) show the need to consider such a problem.
{"title":"The Euroization of Lithuania and Poland: A Comparison","authors":"J. Czaja, A. Dulkys","doi":"10.15388/EKON.2012.0.888","DOIUrl":"https://doi.org/10.15388/EKON.2012.0.888","url":null,"abstract":"Usually, euroization is connected with the necessity of passing through not easy to fulfil and to maintain the Maastricht Treaty criteria and to accept (a) priori a definite course of resigning from the national currency. Upon fulfilling the required adjustment periods of euro adoption, the European law forces a total departure from the national currency. This process is subjected to a solid supervision and control of the EU organs. Additionally, the Maastricht Treaty obliges to introduce the euro when a country is in a good economic condition, confirmed by the fulfilment of nominal convergence criteria. In such a situation, the common currency adoption must be (or should be) always interpreted as a proof of a stable economic development and abilities of keeping such parameters in the future. However, in case of euroization accomplished with omission (or even with infringing) the Treaty, there is no necessity of complementing any European law duties, and especially there is no obligation of totally resigning the national currency. Such kind of euro adoption means not a full but a partial euroization, which can appear in a very difficult situation in country`s economy or when currency independence is not safe and profitable. Resignation from the national currency is like an act of desperation, or at least it is forced by the lack of the abilities to manage the economic problems. The purpose of this publication is to show euroization as state (partly also as process), particularly on the examples of Lithuania and Poland. It obviously it does not seem new, but many changes in the world economy (with special regard to the crisis hurting the European Union) and the lower enthusiasm for joining the Euroland (euro zone) show the need to consider such a problem.","PeriodicalId":269683,"journal":{"name":"PSN: Regional Monetary Union (Topic)","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120945056","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Marion Salines, G. Glöckler, Zbigniew Truchlewski, Paola del Favero
This Occasional Paper examines how and why the institutional framework governing EMU has evolved since the creation of the euro. Building on theories of institutionalism, the paper in particular investigates to what extent functional spillovers from the single currency into other policy domains, like macroeconomic policies or financial regulation, met with an adequate institutional response, and to what extent the existing institutional framework conditioned the response to the financial crisis. The interaction between policy requirements and institutional capabilities is examined both in 'ordinary times' (1999-2007) and under 'crisis conditions' (2007-10). The paper uses a typology of change which helps to put into perspective both the resilience of the institutional framework of EMU and its capacity to adapt. In this respect, it allows for a better understanding and framing of the current reforms of EMU economic governance. It concludes that even though the crisis will accelerate institutional development, it will do so only gradually, as path dependence and an inbuilt bias towards incremental change will prevent policy-makers from pursuing a 'clean slate' strategy.
{"title":"Beyond the Economics of the Euro: Analysing the Institutional Evolution of EMU 1999-2010","authors":"Marion Salines, G. Glöckler, Zbigniew Truchlewski, Paola del Favero","doi":"10.2139/ssrn.1791572","DOIUrl":"https://doi.org/10.2139/ssrn.1791572","url":null,"abstract":"This Occasional Paper examines how and why the institutional framework governing EMU has evolved since the creation of the euro. Building on theories of institutionalism, the paper in particular investigates to what extent functional spillovers from the single currency into other policy domains, like macroeconomic policies or financial regulation, met with an adequate institutional response, and to what extent the existing institutional framework conditioned the response to the financial crisis. The interaction between policy requirements and institutional capabilities is examined both in 'ordinary times' (1999-2007) and under 'crisis conditions' (2007-10). The paper uses a typology of change which helps to put into perspective both the resilience of the institutional framework of EMU and its capacity to adapt. In this respect, it allows for a better understanding and framing of the current reforms of EMU economic governance. It concludes that even though the crisis will accelerate institutional development, it will do so only gradually, as path dependence and an inbuilt bias towards incremental change will prevent policy-makers from pursuing a 'clean slate' strategy.","PeriodicalId":269683,"journal":{"name":"PSN: Regional Monetary Union (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126566282","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2001-12-31DOI: 10.11644/KIEP.JEAI.2001.5.2.82
Charles Wyplosz
Monetary Union in Europe has been the natural response to the combined desire of stabilizing intra-European exchange rates and of lifting permanently all capital controls. The commitment to stable exchange rate has long been rooted in policymakers' conviction that trade integration requires precise rules which eliminate the risk of misalignments, whether imposed by the markets or arranged by the authorities. The success in maintaining fixed-but-adjustable exchange rates within the EMS and next in adopting a single currency is largely due to the patient and progressive building institutions that became the uneasy repository of those parts of national sovereignty that have been abandoned. This experience suggests three lessons for current discussions about a monetary union in Asia. First, multilateral regional exchange rate arrangements are more conducive to an effective defense than indirect approaches like basket pegs. They probably require some limits to capital mobility. Second, adopting a single currency necessitates elaborate preparations that can only be underpinned by the gradual build up of collective institutions. Third, a monetaryMonetary Union in Europe has been the natural response to the combined desire of stabilizing intra-European exchange rates and of lifting permanently all capital controls. The commitment to stable exchange rate has long been rooted in policymakers' conviction that trade integration requires precise rules which eliminate the risk of misalignments, whether imposed by the markets or arranged by the authorities. The success in maintaining fixed-but-adjustable exchange rates within the EMS and next in adopting a single currency is largely due to the patient and progressive building institutions that became the uneasy repository of those parts of national sovereignty that have been abandoned. This experience suggests three lessons for current discussions about a monetary union in Asia. First, multilateral regional exchange rate arrangements are more conducive to an effective defense than indirect approaches like basket pegs. They probably require some limits to capital mobility. Second, adopting a single currency necessitates elaborate preparations that can only be underpinned by the gradual build up of collective institutions. Third, a monetary union requires some reasonable degree of real convergence. This implies starting with a core of sufficiently homogeneous countries. At this stage, starting with a monetary union in Asia would imply reversing the European sequencing, which started with a common market, moved on to the EMS, and liberalization of capital movements.
{"title":"A Monetary Union in Asia? Some European Lessons","authors":"Charles Wyplosz","doi":"10.11644/KIEP.JEAI.2001.5.2.82","DOIUrl":"https://doi.org/10.11644/KIEP.JEAI.2001.5.2.82","url":null,"abstract":"Monetary Union in Europe has been the natural response to the combined desire of stabilizing intra-European exchange rates and of lifting permanently all capital controls. The commitment to stable exchange rate has long been rooted in policymakers' conviction that trade integration requires precise rules which eliminate the risk of misalignments, whether imposed by the markets or arranged by the authorities. The success in maintaining fixed-but-adjustable exchange rates within the EMS and next in adopting a single currency is largely due to the patient and progressive building institutions that became the uneasy repository of those parts of national sovereignty that have been abandoned. This experience suggests three lessons for current discussions about a monetary union in Asia. First, multilateral regional exchange rate arrangements are more conducive to an effective defense than indirect approaches like basket pegs. They probably require some limits to capital mobility. Second, adopting a single currency necessitates elaborate preparations that can only be underpinned by the gradual build up of collective institutions. Third, a monetaryMonetary Union in Europe has been the natural response to the combined desire of stabilizing intra-European exchange rates and of lifting permanently all capital controls. The commitment to stable exchange rate has long been rooted in policymakers' conviction that trade integration requires precise rules which eliminate the risk of misalignments, whether imposed by the markets or arranged by the authorities. The success in maintaining fixed-but-adjustable exchange rates within the EMS and next in adopting a single currency is largely due to the patient and progressive building institutions that became the uneasy repository of those parts of national sovereignty that have been abandoned. This experience suggests three lessons for current discussions about a monetary union in Asia. First, multilateral regional exchange rate arrangements are more conducive to an effective defense than indirect approaches like basket pegs. They probably require some limits to capital mobility. Second, adopting a single currency necessitates elaborate preparations that can only be underpinned by the gradual build up of collective institutions. Third, a monetary union requires some reasonable degree of real convergence. This implies starting with a core of sufficiently homogeneous countries. At this stage, starting with a monetary union in Asia would imply reversing the European sequencing, which started with a common market, moved on to the EMS, and liberalization of capital movements.","PeriodicalId":269683,"journal":{"name":"PSN: Regional Monetary Union (Topic)","volume":"84 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2001-12-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134140484","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.22495/JGR_V4_I4_C1_P1
A. Lanzavecchia, Eugenio Pavarani, G. Tagliavini
The adoption of a single currency in Europe is a pure political project. What we have learned from Greek crisis is that being in the Eurozone means that creditors can destroy a national economy and seize public assets if the government steps out of line. To keep the European project alive, we here call for a fundamental reform on sovereign debt: switching from a goal to which policy is constrained, back to a tool to serve policy aims. In a distressed country, lenders has the power to forces the borrower to accept and to adopt restrictive spending policies that defend their interest at the expense of citizen’s ones. Eventually, this leads inevitably to the loss of autonomy in borrower’s decisions on fiscal policy, spending policy, public properties. If the cause for this degenerative process is the privilege on sovereign debt, then we need to find a new framework that reclassifies the public debt as functional to human development rather than individual profits. A country shall not be allowed to repay a debt that goes beyond its repayment capacity. The maximum payback capacity shall be settled before the credit is granted as a fraction of its primary balance. As such, the amount of primary balance not pledged to the repayment of the debt shall be always available to the government to undertake investments, social or security expenses and to face unexpected events. If this rule were implemented, the capital market would be automatically regulated: the debt that exceeds that threshold would be automatically written-off.
{"title":"How Euro Shrinks Democracy: Insights from the Greek Crisis","authors":"A. Lanzavecchia, Eugenio Pavarani, G. Tagliavini","doi":"10.22495/JGR_V4_I4_C1_P1","DOIUrl":"https://doi.org/10.22495/JGR_V4_I4_C1_P1","url":null,"abstract":"The adoption of a single currency in Europe is a pure political project. What we have learned from Greek crisis is that being in the Eurozone means that creditors can destroy a national economy and seize public assets if the government steps out of line. To keep the European project alive, we here call for a fundamental reform on sovereign debt: switching from a goal to which policy is constrained, back to a tool to serve policy aims. In a distressed country, lenders has the power to forces the borrower to accept and to adopt restrictive spending policies that defend their interest at the expense of citizen’s ones. Eventually, this leads inevitably to the loss of autonomy in borrower’s decisions on fiscal policy, spending policy, public properties. If the cause for this degenerative process is the privilege on sovereign debt, then we need to find a new framework that reclassifies the public debt as functional to human development rather than individual profits. A country shall not be allowed to repay a debt that goes beyond its repayment capacity. The maximum payback capacity shall be settled before the credit is granted as a fraction of its primary balance. As such, the amount of primary balance not pledged to the repayment of the debt shall be always available to the government to undertake investments, social or security expenses and to face unexpected events. If this rule were implemented, the capital market would be automatically regulated: the debt that exceeds that threshold would be automatically written-off.","PeriodicalId":269683,"journal":{"name":"PSN: Regional Monetary Union (Topic)","volume":"257 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124219066","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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