A core group of European Union member countries is about to set up a monetary union, but they are keeping their fiscal policies decentralized. This paper aims at analyzing the role played by the default risk on Treasury bonds, in this particuliar framework. We focus on the interactions between the risk-adjusted interest rate and several main macroeconomic variables like income, public debt and government spending. In particular, our analysis suggests that a “European Compensation Fund” would provide support for countries affected by adverse shocks.
SOUVETON, R. et VRANCEANU, R. (1996). Une étude des conséquences macroéconomiques du risque de défaut sur les dettes nationales en Union Monétaire.