The European Redemption Pact: An Illustrative Guide

The Euro Area Crisis, edited by Catherine Mathieu and Henri Sterdyniak, Revue de l’OFCE/Debates and Policies, 127, p. 341 - 368

Posted: 2 Oct 2013

See all articles by Hasan Doluca

Hasan Doluca

Baden-Wuerttemberg Cooperative State University Mosbach

Malte Hübner

Independent

Dominik Rumpf

University of Würzburg

Benjamin Weigert

University of Giessen - Department of Economics

Date Written: January 1, 2013

Abstract

The European Redemption Pact (ERP), a proposal of the German Council of Economic Experts, describes an exit strategy from the debt crisis which currently plagues the euro area. The pact includes a binding commitment of all participating countries to bring public debt ratios below the reference value of 60% within the next 20 to 25 years. To ensure that this objective can be reached with realistic primary balances, participating countries can transfer their excessive debt exceeding the 60% threshold at a certain date, into a redemption fund for which participating member countries are jointly and severally liable. In this technical paper, we describe in detail one possible way of implementing the ERP and the primary balances each country would need to achieve under the proposal.

Keywords: European Redemption Pact, European debt crisis

Suggested Citation

Doluca, Hasan and Hübner, Malte and Rumpf, Dominik and Weigert, Benjamin, The European Redemption Pact: An Illustrative Guide (January 1, 2013). The Euro Area Crisis, edited by Catherine Mathieu and Henri Sterdyniak, Revue de l’OFCE/Debates and Policies, 127, p. 341 - 368, Available at SSRN: https://ssrn.com/abstract=2334807

Hasan Doluca (Contact Author)

Baden-Wuerttemberg Cooperative State University Mosbach ( email )

Lohrtalweg 10
Mosbach, 74821
Germany

Malte Hübner

Independent ( email )

Dominik Rumpf

University of Würzburg ( email )

Sanderring 2
Würzburg, D-97070
Germany

Benjamin Weigert

University of Giessen - Department of Economics ( email )

Licher Str. 62
Giessen, Hessen D-35394
Germany

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