Abstract
Analyzing the source of the Eurozone sovereign debt crisis, the paper argues the need for greater risk sharing and joint liability across sovereigns. This will require amending some of the legal provisions that underlie the European Union and the creation of the Euro. Once this is done it will be possible to consider the creation of Eurobonds and other liability arrangements, which can promote investment and job creation. A simple theoretical model is presented to bolster the argument.
Acknowledgements
This is a revised version of the lecture given (by audio) to the “Workshop on the Law and Economics of Eurobonds beyond Crisis Management” held at Bucerius Law School, Hamburg, on 8 January 2016. I am grateful to Tito Cordella, Vivian Hon, Magali Pinat, Hans-Bernd Schäfer, and other participants of the Workshop. I had presented some related ideas as part of my Global Economy Lecture at the Österreichische Nationalbank, in Vienna, on 16 November 2015. I am grateful also to the participants of that lecture for numerous helpful comments.
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