The Open UniversitySkip to content
 

An Outline of a Progressive Resolution to the Euro-area Sovereign Debt Overhang: How a Five year Suspension of the Debt Burden Could Overthrow Austerity

Sotiropoulos, Dimitris; Milios, John and Lapatsioras, Spyros (2014). An Outline of a Progressive Resolution to the Euro-area Sovereign Debt Overhang: How a Five year Suspension of the Debt Burden Could Overthrow Austerity. Levy Economics Institute, Annandale-on-Hudson, NY.

Full text available as:
[img]
Preview
PDF (Version of Record) - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Download (2MB) | Preview
URL: http://www.levyinstitute.org/pubs/wp_819.pdf
Google Scholar: Look up in Google Scholar

Abstract

The present study puts forward a plan for solving the sovereign debt crisis in the euro area (EA) in line with the interests of the working classes and the social majority. Our main strategy is for the European Central Bank (ECB) to acquire a significant part of the outstanding sovereign debt (at market prices) of the countries in the EA and convert it to zero-coupon bonds. No transfers will take place between individual states; taxpayers in any EA country will not be involved in the debt restructuring of any foreign eurozone country. Debt will not be forgiven: individual states will agree to buy it back from the ECB in the future when the ratio of sovereign debt to GDP has fallen to 20 percent. The sterilization costs for the ECB are manageable. This model of an unconventional monetary intervention would give progressive governments in the EA the necessary basis for developing social and welfare policies to the benefit of the working classes. It would reverse present-day policy priorities and replace the neoliberal agenda with a program of social and economic reconstruction, with the elites paying for the crisis. The perspective taken here favors social justice and coherence, having as its priority the social needs and the interests of the working majority.

Item Type: Other
Copyright Holders: 2014 Levy Economics Institute
Extra Information: ISSN: 1547-366X
Keywords: euro area; sovereign debt; European Central Bank; unconventional monetary policies
Academic Unit/School: Faculty of Business and Law (FBL) > Business > Department for Accounting and Finance
Faculty of Business and Law (FBL) > Business
Faculty of Business and Law (FBL)
Research Group: Innovation, Knowledge & Development research centre (IKD)
Item ID: 41385
Depositing User: Dimitris Sotiropoulos
Date Deposited: 24 Nov 2014 09:48
Last Modified: 07 Dec 2018 22:00
URI: http://oro.open.ac.uk/id/eprint/41385
Share this page:

Download history for this item

These details should be considered as only a guide to the number of downloads performed manually. Algorithmic methods have been applied in an attempt to remove automated downloads from the displayed statistics but no guarantee can be made as to the accuracy of the figures.

Actions (login may be required)

Policies | Disclaimer

© The Open University   contact the OU