№257. Speculative Attacks within or outside a Monetary Union: Default versus Inflation (what to do today)
№257. Speculative Attacks within or outside a Monetary Union: Default versus Inflation (what to do today)

Author(s): Daniel Gros
Subject(s): National Economy, Economic policy, Government/Political systems, Political economy, Financial Markets, Public Finances
Published by: CEPS Centre for European Policy Studies
Keywords: Monetary Union; Inflation; Instability of high public debt; Italy; GDP;
Summary/Abstract: Is a high level of public debt inherently more dangerous within a monetary union? During the1990s it was often argued that only by entering the EMU could Italy (or Spain) protect itself from the high interest rates it had to pay on its large public debt. The argument was that by joining the single currency, Italy could convince financial markets that it would not inflate away the value of its debt and hence benefit from lower risk premia.

• Details
• Contents