IMF-主权债务经济学、救助与欧元区危机（英）-2023.8

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Pierre-OlivierGourinchas,PhilippeMartin,andToddMesser

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representtheviewsoftheIMF,itsExecutiveBoard,

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2023

AUG

©2023InternationalMonetaryFund

WP/23/177

IMFWorkingPaper*

ResearchDepartment

TheEconomicsofSovereignDebt,Bailouts,andtheEurozoneCrisisPreparedbyPierre-OlivierGourinchas,PhilippeMartin,andToddMesser

AuthorizedfordistributionbyPierre-OlivierGourinchas

August2023

IMFWorkingPapersdescriberesearchinprogressbytheauthor(s)andarepublishedtoelicitcommentsandtoencouragedebate.TheviewsexpressedinIMFWorkingPapersarethoseoftheauthor(s)anddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement.

ABSTRACT:Despiteaformal‘no-bailoutclause,’weestimatesignificantnetpresentvaluetransfersfrom

theEuropeanUniontoCyprus,Greece,Ireland,Portugal,andSpain,rangingfromroughly0.5%(Ireland)toawhopping43%(Greece)of2010outputduringtheEurozonecrisis.Weproposeamodeltoanalyzeandunderstandbailoutsinamonetaryunion,andthelargeobserveddifferencesacrosscountries.Wecharacterizebailoutsizeandlikelihoodasafunctionoftheeconomicfundamentals(economicactivity,debt-to-gdpratio,defaultcosts).Ourmodelembedsa‘Southernview’ofthecrisis(transfersdidnothelp)anda‘Northernview’(transfersweakenfiscaldiscipline).Whileastrongerno-bailoutcommitmentreducesrisk-shifting,itmaynotbeoptimalfromtheperspectiveofthecreditorcountry,evenex-ante,ifitincreasestheriskofimmediateinsolvencyforhighdebtcountries.Hence,themodelprovidesapotentialjustificationfortheoftendecriedpolicyof‘kickingthecandowntheroad.’Mappingthemodeltotheestimatedtransfers,wefindthatthemainpurposeoftheoutsizedGreekbailoutwastopreventanexitfromtheeurozoneandpossiblecontagion.Bailoutstoavoidsovereigndefaultwerecomparativelymodest.

JELClassificationNumbers:G15,F34,F45

Keywords:Euroarea;MonetaryUnion;Sovereigndebt;bailouts

todd.e.messer@

Author’sE-MailAddress:pgourinchas@,philippe.martin@sciencespo.fr,

*TheworkingpaperpublishedbyFED,NBERandCBERandcanbefoundat:

FED

NBER

CEPR

WORKINGPAPERS

TheEconomicsofSovereignDebt,Bailouts,andtheEurozoneCrisis

PreparedbyPreparedbyPierre-OlivierGourinchas,PhilippeMartin,and

ToddMesser1

1WethankPhilippeAghion,JavierBianchi(discussant),DanielCohen(discussant),GitaGopinath,AlbertoMartin(discussant),DirkNiepeltandJerominZettelmeyerforinsightfuldiscussionsaswellasseminarparticipantsatCEPR-ESSIM,

NBER-IFM,theFederalReserveBankofDallas-UniversityofHouston-BancodeMexico3rdInternationalConferenceonInternationalEconomics,BanquedeFrance,StockholmUniversity,UniversityofOslo,IESEBusinessSchool,BostonCollege,UniversityofMichigan,UCRiverside,Columbia.ThefirstdraftofthispaperwaswrittenwhileP-O.Gourinchaswas

visitingHarvardUniversity,whosehospitalityisgratefullyacknowledged.WethanktheFondationBanquedeFranceandtheBanquedeFrance-SciencesPopartnershipforitsfinancialsupport.WeareparticularlygratefultoAitorErceforhiscommentsandhelponthedataonofficialloans.TheviewsinthispaperaretheresponsibilityoftheauthorsanddonotnecessarilyrepresentthoseoftheFederalReserveBoard,theFederalReserveSystem,theIMF,itsExecutiveBoard,orIMFManagement.

1

1Introduction.

‘ThemarketsaredeludingthemselveswhentheythinkatacertainpointtheothermemberstateswillputtheirhandsontheirwalletstosaveGreece.’

ECBExecutiveBoardmember,Ju´rgenStark(

Reuters

,

2010

,January10)

‘Theeuro-regiontreatiesdon’tforeseeanyhelpforinsolventcountries,butinrealitytheotherstateswouldhavetorescuethoserunningintodifficulty.’

GermanfinanceministerPeerSteinbrueck(

TheFinancialTimes

,

2009

,February18)

‘No,Greecewillnotdefault.Please.Intheeuroarea,thedefaultdoesnotexist.’EconomicsCommissionerJoaquinAlmunia(

Reuters

,

2009

,January29)

AstheEurozonecrisisof2010-2015highlighted,apotentialdefaultongovernmentdebtwithinamon-etaryunioncomprisedofsovereignmembersinvolvesuniquefeaturesthataffectthepotentialcostsandbenefitstodebtorandcreditorcountries.Amonetaryunionfacilitatesfinancialintegration.Withlargewithin-unioncross-borderholdingsoffinancialassets,includinggovernmentdebtheldbybanks,theexposureofcreditorcountriesinsidetheuniontosovereignriskishigh.Inaddition,monetaryandeconomicunionsusuallygohandinhand,fosteringrealintegration.Shouldacountryexperienceaseverefiscalcrisis,thishasthepotentialtodisproportionatelydisruptitstradingpartnersinsidetheunion.Further,asovereigndefaultcouldbethefirststeptowardsapotentialexitfromthemonetaryunion,potentiallyimpairingthecredibilityofothermembersorofthemonetaryunionasawhole.Forcreditorcountriesinsidetheunion,thereissignificantdirectandindirectexposureifafiscallyweakmemberdefaults.

Shouldthesecostsforthegroupofcreditorcountriesexceedtheresourcesthedebtorcountryneedstoavoidadefault,aunilateraltransfer-intheformofabailout-mightbeapreferredoutcomefortheunion,helpingtoachieve(ex-post)efficiency.Itfollowsthatamonetaryunion,throughthedirectandcollaterallinkagesitgeneratesamongmembers,createsconditionswherecreditorcountriesmaydesire(ex-post)tobail-outweakermembers.Forthedefaultingcountry,notsurprisingly,thepossibilityoffuturebailoutsdistorts(ex-ante)incentivestoissuedebtbysofteningthedebtor’sbudgetconstraint.

Thisresultsinexcessivedebtissuancethatcanmaketheunionmorefragile.Suchproblemsdidnot

endwiththeEurozonedebtcrisis.Morerecently,discussionsaboutunilateraltransfersintheEurozonehavebeenrevivedinthecontextoftheCOVID-19crisis(

B

nassy-Qur,Corsetti,Fata´s,Febelmayr,

Fratzscher,Fuest,Giavazzi,Marimon,Martin,Pisani-Ferryetal.

,

2020

).

Thispaperempiricallyandtheoreticallyinvestigatesthesizesanddeterminantsofunilateraltransferswithinamonetaryunion.Empirically,wedocumentthesupportthatfragileEurozonecountriesre-ceivedduringtheEurozonecrisis.Weshowsubstantialheterogeneityinthesizesofthesebailouts

2

acrossfiveEurozonecountries:Cyprus,Greece,Ireland,Portugal,andSpain.Wethenpresentamodelthatcapturesthetrade-offbetweenex-postbailoutandex-anteborrowingincentives.Themodelallowsustocharacterizethelikelihoodandsizeofbailoutsinequilibriumasafunctionofcountrycharacter-istics.Themodelalsoexplorestheconditionsunderwhichitisbeneficial(ex-ante)forthecreditorcountrytoallowforthepossibilityof(ex-post)bailouts.

WeestimatetheimplicittransfersarisingfromofficialEuropeanUnionfinancingtofiveEurozonecrisiscountriesandthreenon-Eurozonecountries.Thesecountriesreceivedfundingfromeuroareaorganiza-tionsandtheInternationalMonetaryFund(IMF).Wecombofficialsourcestoconstructcountry-lenderspecificdisbursements,interestpayments,andrepaymentprofiles(bothrealizedandexpected).IftheEurozoneprogrammessimplyprovidedrisk-freefundingatthemarketrisk-freerate,therewouldbenoimplicitsubsidyandbailoutswouldbezero.Moregenerally,theseprogrammesincludeanimplicitsubsidy(bailout)iftheychargearatethatisbelowtherisk-adjustedmarketratereflectingtheriskoftheprogramme.

Ourmethodologyestimatesthesubsidycomponentrelativetothatrisk-adjustedcounterfactual.Akeyassumptionisthechoiceofarelevantrisk-adjustedmarketrate.Itisimmediatethatthisshouldnotbethecurrentmarketratesinceofficiallendinghasgenericallyamuchlowerriskprofile.InsteadweusetheinternalrateofreturnontheInternationalMonetaryFund(IMF)lendingtothesecountries.

1

ThisassumptionisjustifiedsinceIMFprogramsaresupersenior,evenrelativetotheEuropeanUnioninstitutions.Importantly,thisassumptionyieldsalowerboundonthetruesizeoftransfersfromtheEuropeanUniontorecipientcountriesforatleastfourreasons.First,sincetheIMFissupersenior,thetruerisk-adjustedrateforEuropeaninstitutionsislikelytobehigherthantheIMF.Second,IMF

programsarerelativelyshortterm(betweenthreeandnineyears)comparedtoEuropeanpackages,withadurationrangingfrom10yearsto30years.AdjustingtheIMFinternalrateforaterm-premiacomponentwouldincreasetheestimatesofthetransfers.Third,IMFprogramthemselvesmayincludeatransfercomponent,althoughtheevidencein

JoshiandZettelmeyer

(

2005

)suggeststhattheydonotincorporateasubstantialtransfercomponent,exceptforconcessionallendingtopoorandhighly

indebtedcountries.Fourth,weignoreanypotentialtransfercomponentarisingfromtheEuropeanCentralBankpoliciessuchastheSecuritiesMarketProgramortheAssetPurchaseProgram.

OurestimatesindicatesubstantialvariationintheimplicittransfersreceivedbythefiscallyweakEuro-zonecountries,fromroughly0.4percentofoutputforIrelandorSpain,toroughly3percentofoutputforCyprusandPortugal,toaverysubstantial43.7percentofoutputforGreece.Bycontrast,non-Eurozonecountriesthatreceivedatransfer,suchasHungary,Latvia

2

orRomania,didnotreceiveanymeasurabledirecttransferfromtheEuropeanUnion.Itisclear,basedontheseestimates,thatunilateral

1SpaindidnothaveanIMFprogram,soweuseanaverageoftheIMF’sinternalrateofreturnfortheotherfourcountries.

2LatviaadoptedtheEuroonJanuary1,2014.

3

transfersdidhappen,orsaiddifferently,thattheno-bailoutclausewasnotenforced.

TounderstandthenatureofbailoutsintheEurozone,wethenpresentasimplemodelthatcapturesthetrade-offbetweenex-postbailoutsandex-anteborrowingincentivesinsideamonetaryunion.Themodelfeaturesthreecountries.Twocountriesaremembersofamonetaryunion,oneofwhichisfiscallystrongandtheotherfiscallyfragile.Athirdcountryrepresentstherestoftheworld,outsidethemonetaryunion.Eachregionissuessovereigndebtandprivateportfolioholdingsaredeterminedendogenously.Asovereigndefaultinflictsdirectcostsonbondholders,butalsoindirectcostsonboththedefaultingcountryanditsmonetaryunionpartner.Thestructureofthesecollateralcosts,togetherwiththerealizationofoutputandthecompositionofportfolios,determinetheconditionsunderwhichthefiscallystrongcountrymayprefertobailoutitsfiscallyweakpartner.

Ourmodelgeneratesanumberofimportantresults.First,becauseoftheindirectcostsadefaultinflictsonthecreditorcountry,itisalwayspreferableforthatcountrytobailoutthedebtorcountry(i.e.anexternalbailout),ratherthanabsorbthelossesofitsownbondholders(aninternalbailout).Second,thefiscallystrongcountryrealizesthatanybailoutalsoservestorepaydebtheldbytherestoftheworld.Thislimitsthatcountry’swillingnesstoofferfinancialassistance.Third,whileex-postbailoutsareex-postefficientfromthejointperspectiveofthetwomembersofthemonetaryunion,theytransferallthesurplustothefiscallystrongcountry,leavingthedebtorcountrynobetteroffthanwithadefault.Wecallthisthe‘Southernview’ofthecrisis.Thatfinancialassistancetoacountrythatisclosetodefaultdoesnotimproveitsfatemayseemsurprising.However,intheabsenceofpoliticalintegration,thereisnoreasoncreditorcountrieswouldoffermorethantheminimaltransferrequiredthatleavesthedebtorcountryindifferentbetweendefaultandnodefault.Seenthroughthelensofourmodel,even

ifGreecereceivesatransferequalto44percentofitsoutput,thisdoesnotnecessarilymakeGreecebetteroffex-post.

However,theanticipationofabailoutcreatesex-anteatypicalmoralhazardproblem:ahigherlike-lihoodofabailoutlowerstheeffectivecostofborrowingforthefiscallyweakcountry,generatingexcessiveborrowing,attheexpenseofthefiscallystrongcountry.Wecallthisweakeningofex-antefiscaldisciplinethe‘Northernview’ofthecrisis.InthecontextoftheEurozonecrisis,thisposition

hasbeenarticulatedmanytimesbytheGermanTreasuryandothercountrieswhohavepointedtofiscallaxityasarootcauseofthecrisisinsomecountries.Ouranalysisverynaturallyreconcilesthe‘Northern’and‘Southern’viewsofthecrisisasthetwosidesofthesamecoin:riskshiftingbythedebtorcountryoccursinthefirstperiodbecauseoftheanticipationofthebailout,evenif,ex-post,thecreditorcountrycapturesalltheefficiencygainsfromavoidingadefault.Thissuggestsasimplefix: ifthecreditorcountrycouldcrediblycommittoanobail-outclause,thiswouldeliminateex-anteriskshiftingandover-borrowing.

4

Acentralresultofouranalysisisthatsuchcommitmentmaynotbeoptimal,evenfromtheex-anteperspectiveofthecreditorcountry.Instead,wefindthatifthedebtorcountry’sinitialdebtlevelissufficientlyelevated,thefiscallystrongcountrymayprefernottocommittoano-bailoutclause.Thereasonisthattheannouncementofastrictno-bailoutclausewouldpushthedebtorcountryintoim-mediateinsolvency,withindirectcostsforthecreditors.Instead,ifafuturebailoutremainspossible,thedebtorcountrymaybeabletoroll-overitsinitialdebttoday,avoidingimmediatedefault.While

thiscanleadtoexcessiveborrowing,thescopeforriskshiftingismorelimited,thehighertheinitialdebtis,asthedebtorcountryfindsitselfalreadyclosetothemaximumofitsLaffercurve.Hencethefiscallystrongcountryfacesameaningfultrade-offbetweentheimmediateinsolvencyoftheborrowerandarolloverwiththepossibilityofafuturedefault.Thus,ourmodelprovidesconditionsunderwhichitisoptimalforcreditorcountriesto‘kickthecandowntheroad,’inofficialEUparlance,byremainingevasiveaboutthestrictnessoftheno-bailoutclause.Thispartofourmodelprovidesawaytointerpretwhathappenedbetween2000and2008whenspreadsonsovereigndebtsintheEurozonewereseverelycompressed.

Wethenallowfortwoseparatedecisionsbyfiscallyweakcountries:whethertodefaultonsovereigndebtandwhethertoexitthemonetaryunion.ThisextensionismotivatedbythefactthatGreecereceivedthelargesttransferfromEUinstitutionsin2012,theyearitdefaultedonitsdebt.Intheextendedmodel,acountrycanreceiveabailoutinordertoavoidexit,evenifitdefaultsonitssovereigndebt,aswasthecaseinGreece.Viewedthroughthelensoftheextendedmodel,thesupersized2012Greekbailoutwasnotintendedtopreventadefaultonpublicdebt,butwasnecessarytoensurethatGreecewouldremainintheEurozone.Asinourbaselinemodel,however,theex-postwelfaregainsfromthattransferaccrueentirelytothecreditorcountriesinsidetheEurozone.Themodeldeliverssharpcharacterizationsofthesizeofex-postbailouts,andwhethertheyarefeasible,asafunctionofa

fewkeyobservablesuchastheinitialdebt-to-gdpratio,thesizeoftherecession,andtheshareofthedebthelddomesticallyorbytherestoftheworld.Wemapthetransfersimpliedbythemodeltothe

empiricallyestimatedtransferstoshowthemodelperformsreasonablywellinmatchingtheobservedresponsetotheEurozonedebtcrisis.

Followingareviewoftheliterature,theremainderofthepaperisorganizedasfollows.In

Section2

,wereviewhowbailoutsunfoldedduringtheEurozonedebtcrisisinthedifferentcountriesandestimatetransfersimplicitinlendingfromEuropeancountriestoGreece,Ireland,Portugal,CyprusandSpain.

Thepossibilityofsuchtransfersisakeyelementofourtheoreticalmodelwhichwepresentin

Section3

.

Section4

analyzestheincentivesfordefaultsandbailoutsand

Section5

studieshowtheseincentivesshapeoptimaldebtissuance.Section

Section6

incorporatesthepossibilityexittheEurozonetorelatethemodelbacktotheempiricallyestimatedtransfers.Section

Section7

concludes.

5

LiteratureReview

Thetheoreticalliteratureonsovereigndebtcriseshasfocusedonthefollowingquestion:whydocoun-

triesrepaytheirdebt?Twodifferentapproacheshaveemerged(seethesurveyby

BulowandRogoff

(

2015

)).Ontheonehand,

EatonandGersovitz

(

1981

)focusonthereputationcostofdefaultforcountriesthatvalueaccesstointernationalcapitalmarketstosmoothconsumption.Ontheotherhand,

Cohen

andSachs

(

1986

),

BulowandRogoff

(

1989a

),

BulowandRogoff

(

1989b

)and

FernandezandRosenthal

(

1990

)focusonthedirectcostsofdefaultintermsofdisruptionoftradeforexample.Ourmodelclearlybelongstothissecondfamilyofmodels.Outputlossforthecountrythatdefaultscomesfromtradeandfinancialdisruptionsbutmayalsocomefromtheriskofexitfromthemonetaryunion.Empirically,

Rose

(

2005

)showsthatdebtrenegotiationresultsinadeclineinbilateraltradeofaround8percenta

year,whichpersistsforaround15years.Collateraldamageofasovereigndefaultplaysanimportantroleinouranalysisoftheeurocrisis.Wearenotthefirsttomakethispoint.

BulowandRogoff

(

1989a

)showthatbecauseprotracteddebtrenegotiationcanharmthirdparties,thedebtorcountryanditslenderscanextractside-payments.

Mengus

(

2021

)showsthatifthecreditor’sgovernmenthaslimitedinformationonindividualdomesticportfolios,directtransferstoresidentscannotbeperfectlytargetedsothatitmaybebetteroffhonoringthedebtor’sliabilities.

Cross-borderlinkagesareincreasinglybeingincorporatedintomodelsofsovereigndefault.Ourpaperanalyzeshowlinkagesinamonetaryunioncanleadtoex-postsolidarity,andconnectsmostcloselyto

Tirole

(

2015

)and

FarhiandTirole

(

2018

).

Tirole

(

2015

)investigatesexanteandexpostformsofsolidarity.

FarhiandTirole

(

2018

)addsasecondlayerofbailoutintheformofdomesticbailoutsofthebankingsystembythesovereigntoanalyzethe“deadlyembrace”ortwo-waylinkbetweensovereignandfinancialbalancesheets.Asinourpaper,theimpactedcountriesmaystandbythetroubledcountrybecausetheywanttoavoidthecollateraldamageinflictedbythelatter.However,ourpaperbuildsonthesetwopapersalonganumberofimportantdimensions.First,weshowhowex-postsolidaritymaynotgenerateanywelfaregainforthedebtorcountry.Second,ouranalysisincludesathirdcountrythatisnotamemberofthemonetaryunion.Thisallowsustoexploreimportantissuesrelatedtodebtre-nationalizationanddebtmonetization.Second,weexplorehowexit,andnotjustdefault,affectsoptimaldebtissuanceandtheformationofbailouts.Finally,weareabletobridgetheorywithempiricsbyconnectingthemodeltoestimatedbailoutsinordertotestthetheoreticalpredictionsofourmodel.Asin

Horn,ReinhartandTrebesch

(

2020

),financialintegrationisimportantindeterminingthescopeofbailouts.

Beyondthesetwopapers,ourworkrelatestootherstudiesfocusingontheEurozonedebtcrisis.

3

3Asubsetofthisliteraturefocusesonbankbailoutsandcountrysolidarity.

DovisandKirpalani

(

2020

)alsoanalyzehowexpectedbailoutschangetheincentivesofgovernmentstoborrowbutconcentrateontheconditionsunderwhichfiscalrulescancorrecttheseincentivesinareputationmodel.

NiepmannandSchmidt-Eisenlohr

(

2013

)analyzehowbank

6

Broner,Erce,MartinandVentura

(

2014

)analyzetheEurozonesovereigncrisisthroughamodelwhichfeatureshomebiasinsovereigndebtholdingsandcreditordiscrimination.Ourmodelshareswith

Broneretal.

(

2014

)thefirstfeaturebutnotthesecond.Intheirmodel,creditordiscriminationprovidesincentivesfordomesticpurchasesofdebtwhichitselfgenerateinefficientcrowding-outofproductiveprivateinvestment.

Uhlig

(

2014

)analyzestheinterplaybetweenbanksholdingsofdomesticsovereigndebt,bankregulation,sovereigndefaultriskandcentralbankguaranteesinamonetaryunion.Con-trarytothispaper,wedonotmodelbanksexplicitlybutthehomebiasinsovereignbondsplaysanimportantroleintheincentivetodefault.Ourmodelalsorelatesto

Corsetti,ErceandUy

(

2018

)whointroduceofficiallendinginstitutionsinamodelofsovereigndebtanddefaultmotivatedbytheeurocrisisbutfocusondifferentquestionsastheyanalyzehowofficiallendinganditsconditions(matu-rityandrates)mayrestoredebtsustainabilityandaffectagovernment’sdecisiontodefault.Arelatedpaperisalso

DellasandNiepelt

(

2016

)whoshowthathigherexposuretoofficiallendersimprovesin-centivestorepayduetomoreseveresanctionsbutthatitisalsocostlybecauseitlowersthevalueofthesovereign’sdefaultoption.Ourmodeldoesnotdistinguishprivateandofficiallenders.

Ourpaperisalsorelatedto

AzzimontiandQuadrini

(

2021

).Likeus,thatpaperexploresconditionsun-derwhichbailoutscanbeParetoimprovingnotjustex-postbutalsoex-ante.Theirpaperemphasizesadifferentmechanismthanours:intheirmodel,publicdebtprovidespublicliquidityandisundersup-pliedinequilibrium.Thepromiseofabailoutincreasestheex-antesupplyofdebt,whichcanbeParetoimproving.Ourpaperoffersacomplementaryanalysis,focusingonthetrade-offthecreditorcountryfacesbetweentriggeringimmediateinsolvencyorahigherlikelihoodoffuturedefault.Ourpaperalsoemphasizestheimportanceofthe‘restoftheworld,’inshapingequilibriumbailouts.Finally,weofferempiricalestimatesofthebailoutsintheeurozonecrisisandrelatethemtothefundamentalsofourmodel.

Sincetheseminalpaperof

Calvo

(

1988

),alargepartoftheliteratureonsovereigndefaulthasfocusedonananalysisofcrisisasdrivenbyself-fulfillingexpectations(seeforexample

ColeandKehoe

(

2000

)).

4

In

thisframework,thecrisisabatesoncetheECBagreestobackstopthesovereigndebtofEurozonemem-bers.Wedepartfromthisliteratureanddonotfocusonsituationswithpotentialmultipleequilibriaorliquidityissues.Thisisnotbecausewebelievethatsuchmechanismshavebeenabsent.Inaframeworkwherethecrisisissolelydrivenbyself-fulfillingexpectations,thebadequilibriumcanbeeliminatedbyacrediblefinancialbackstopandtransfersshouldremain”offtheequilibriumpath”.However,we

bailoutsareaffectedbycross-bordercontagioncosts.

4Forexample,

deGrauwe

(

2012

),

Aguiar,Amador,FarhiandGopinath

(

2015

)and

CorsettiandDedola

(

2016

))interprettheepisodeasarollovercrisiswheresomegovernments(e.g.Spain)experiencedaliquiditycrisis.Animportantdifferencebetween

Aguiaretal

.(

2015

)andourworkisthattheyexcludethepossibilityoftransfersandconcentrateonthelackofcommitmentonmonetarypolicythatmakesthecentralbankvulnerabletothetemptationtoinflateawaytherealvalueofitsmembers’nominaldebt.Weviewthelackofcommitmentontransfersasandistinctivefeatureofamonetaryunionandanalyzetheinteractionbetweenthemonetarypolicyandtransfersinasituationofpossiblesovereigndefault.

7

willshowinthenextsectionthattransfers(fromtheEFSF/ESM)totheperipherycountrieshavebeensubstantialandnotonlytoGreece.

2ImplicitTransfersDuringtheEuroareacrisis

Thissectionbrieflydescribesthefinancialassistanceprogrammesforthemajorcrisiscountries(Cyprus,

Greece,Ireland,Portugal,andSpain).WealsoreviewthetermsofEUfinancialassistanceprogrammestothreenon-EurozonemembersoftheEuropeanUnion(Hungary,LatviaandRomania).Wereferthereaderto

TableA.4

in

AppendixA

andtheOnlineAppendixfordetailsofeachprogram,to

Corsetti,

ErceandUy

(

2020

)foradescriptionofthedevelopmentofaeuroareacrisisresolutionframework,andto

Abbas,Arnold,Dacheva,DeBroeck,Forni,GuerguilandVersailles

(

2014

)forfurtherdiscussiononthecausesanddevelopmentoftheeuroareacrisis..

2.1HistoricalOverview

BailoutsintheEuroarea.ThefoundersoftheEuropeanMonetaryUnionsoughtexplicitlytolimitthepotentialforexcessivedebtissuance.Article125oftheTreatyontheFunctioningoftheEuropeanUnion(TFEU),oftenreferredtoastheno-bailoutclause,preventsanyformofliabilityoftheUnionorMemberStatesforanotherMember’sdebtobligations.

5

Ofcourse,assistancecouldstillbeprovidedviadebtmonetization.Whilethebenefitsandcostsofinflationareborneallmembers,theirdistributionisnotuniform.Surpriseinflationreducestheex-postrealvalueofdebtforallmembers.Thisbenefitsdis-proportionatelyhighlyindebtedcountries,whilethecostsofinflationaremoreuniformlydistributed.

Article123ofthesametreatysoughttoaddressthisbyexpresslyprohibitingtheEuropeanCentralBankfromdirectlypurchasingmembercountries’publicdebt.

6

YetthesameEuropeanTreatydidnotclosethedoorentirelyonthepossibilityof(ex-post)financialassistance.Forinstance,Article122oftheTFEUallowstheUnionorotherMemberStatestoprovideassistancetoothermembersunderexceptionalcircumstances.

7

Indeed,atvariouspointsduringthe

5Article125stipulatesthat‘TheUnionshallnotbeliablefororassumethecommitmentsofcentralgovernments,re-gional,localorotherpublicauthorities,otherbodiesgovernedbypubliclaw,orpublicundertakingsofanyMemberState,w