Abstract
AbstractWe analyze various Eurobond proposals and show that they have different effects on moral hazard, interest rates, international transfer payments and the necessity for European fiscal centralization. On closer inspection, these consequences are more diverse than the discussion on Eurobonds so far suggests. For instance, Eurobonds might increase rather than decrease marginal interest rates in weaker countries. Some proposals lead to international transfer payments while others do not. Some require changes to the Treaty on the Functioning of the European Union, others require changes to national constitutions, and others yet require both. Some proposals, while not necessitating such legal change, may still have mutual advantages for the issuing states.
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