References of "Tsoukalas, John"
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See detailPolitical Economics of Fiscal Consolidations and External Sovereign Accidents
Achury, Carolina; Koulovatianos, Christos UL; Tsoukalas, John

E-print/Working paper (2016)

As the recent chain of EU sovereign crises has demonstrated, after an unexpected massive rise to the debt GDP ratio, several EU countries manage to proceed with fiscal consolidation quickly and ... [more ▼]

As the recent chain of EU sovereign crises has demonstrated, after an unexpected massive rise to the debt GDP ratio, several EU countries manage to proceed with fiscal consolidation quickly and effectively, while other countries, notably Greece, proceed slowly, fueling Graccident and Grexit scenarios, even after generous rescue packages, involving debt haircuts and monitoring from official bodies. Here we recursively formulate a game among rent-seeking groups and propose that high debt-GDP ratios lead to predictable miscoordination among rent-seeking groups, unsustainable debt dynamics, and open the path to political accidents that foretell Graccident scenarios. Our analysis and application helps in under- standing the politico-economic sustainability of sovereign rescues, emphasizing the need for fiscal targets and possible debt haircuts. We provide a calibrated example that quantifies the threshold debt-GDP ratio at 137%, remarkably close to the target set for private sector involvement in the case of Greece. [less ▲]

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See detailPolitical Economics of External Sovereign Defaults
Achury, Carolina; Koulovatianos, Christos UL; Tsoukalas, John

E-print/Working paper (2013)

We study how excessive debt-GDP ratios affect political sustainability of prudent fiscal policy in country members of a monetary union. We develop a model with free choice of distinct rent-seeking groups ... [more ▼]

We study how excessive debt-GDP ratios affect political sustainability of prudent fiscal policy in country members of a monetary union. We develop a model with free choice of distinct rent-seeking groups to cooperate (or not) in providing public goods, in seeking rents, and in austere debt issuing through international markets. Noncooperation of rent-seeking groups on fiscal prudence triggers collective fiscal impatience: fiscal debt is issued excessively because each group expropriates extra rents before other groups do so, too. Such collective fiscal impatience leads to a vicious circle of high international interest rates and external-debt default. Our calibration suggests that debt-GDP ratios below 137% foster cooperation among rent-seeking groups, which avoids collective fiscal impatience and default. Our analysis helps in understanding the politicoeconomic sustainability of sovereign rescue packages, emphasizing the need for fiscal targets and for possible debt haircuts. [less ▲]

Detailed reference viewed: 122 (10 UL)
See detailExternal Sovereign Debt in a Monetary Union: Bailouts and the Role of Corruption
Achury, Carolina; Koulovatianos, Christos UL; Tsoukalas, John

Report (2011)

We build a tractable stylized model of external sovereign debt and endogenous international interest rates. In corrupt economies with rent-seeking groups stealing public resources, a politico-economic ... [more ▼]

We build a tractable stylized model of external sovereign debt and endogenous international interest rates. In corrupt economies with rent-seeking groups stealing public resources, a politico-economic equilibrium is characterized by permanent fiscal impatience which leads to excessive issuing of sovereign bonds. External creditors envision the corrupt economy’s fiscal impatience and buy its bonds at higher interest rates. In turn, this interest-rate increase exacerbates the problem of oversupplying debt, leading the economy to a perfect-foresight trap. In incorrupt countries which have entered a high-interest-rate/high debt-GDP-ratio trap because an immediately recent disaster has caused a sudden jump to a high outstanding debt-GDP ratio, we show that bailout plans with controlled interest rates can help in reducing debt-GDP ratios after some time. On the contrary, under corruption, we show that bailouts are ineffective unless rent-seeking groups are eradicated. [less ▲]

Detailed reference viewed: 55 (7 UL)