eprintid: 1567856
rev_number: 22
eprint_status: archive
userid: 608
dir: disk0/01/56/78/56
datestamp: 2017-08-02 15:28:30
lastmod: 2020-02-12 20:58:04
status_changed: 2017-11-09 15:35:53
type: article
metadata_visibility: show
creators_name: De Grauwe, P
creators_name: Ji, Y
creators_name: Steinbach, A
title: The EU debt crisis: Testing and revisiting conventional legal doctrine
ispublished: pub
divisions: UCL
divisions: A01
divisions: B03
divisions: D92
keywords: Eurozone, Government debt, No-bailout clause, Ban on monetary financing, Panel data, Lender of last resort
note: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
abstract: Controversies surrounding the European sovereign debt crisis loom prominent in the public debate. From a legal perspective, the no-bailout rule and the ban on monetary financing constitute the main principles governing the legality review of financial assistance and liquidity measures. Interpretation of these rules is full of empirical claims. According to conventional legal doctrine, bond spreads only depend on the country’s debt position, largely ignoring other causal factors including liquidity. We test the hypotheses implicit in conventional legal reasoning. We find evidence that a significant part of the surge in the spreads of the peripheral Eurozone countries was disconnected from underlying fundamentals and particularly from a country’s debt position, and was associated rather strongly with market sentiments and liquidity concerns. We apply our empirical findings to the legal principles as interpreted by recent jurisprudence arguing that application of the no-bailout principle and the ban on monetary financing should be extended to capture non-debt related factors. Also, the empirical results suggest taking recourse to alternative legal grounds for reviewing the legality of anti-crisis instruments and allowing for a lender of last resort in the euro zone.
date: 2017-06-03
date_type: published
official_url: http://doi.org/10.1016/j.irle.2017.05.002
oa_status: green
full_text_type: other
language: eng
primo: open
primo_central: open_green
article_type_text: Article
verified: verified_manual
elements_id: 1408270
doi: 10.1016/j.irle.2017.05.002
lyricists_name: Ji, Yuemei
lyricists_id: YJIXX03
actors_name: Ji, Yuemei
actors_id: YJIXX03
actors_role: owner
full_text_status: public
publication: International Review of Law and Economics
volume: 51
number: C
pagerange: 29-37
issn: 0144-8188
citation:        De Grauwe, P;    Ji, Y;    Steinbach, A;      (2017)    The EU debt crisis: Testing and revisiting conventional legal doctrine.                   International Review of Law and Economics , 51  (C)   pp. 29-37.    10.1016/j.irle.2017.05.002 <https://doi.org/10.1016/j.irle.2017.05.002>.       Green open access   
 
document_url: https://discovery.ucl.ac.uk/id/eprint/1567856/1/Grauwe_Ji_Steinbach__EU-debt-crisis-paper-29%20May%202017-accepted%20version.pdf