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Discussion of "Tax buyouts" by M. Del Negro, F. Perri and F. Schivardi



Comment on “Sovereign debt markets in turbulent times_ Creditor discrimination and crowding-out effects” by Broner, Erce, Martin and Ventura The European sovereign debt crisis emerged with startling speed. As late as April of 2008, the spread between yields on in March of 2009, these spreads had increased almost six-fold and averaged 285 basis points, while by September 2010 they atically. d with significant contractions in the most severely affected economies. Although some ise in spreads, in the years after 2008 these declines have continued in many countries ressed relative to its 2007 level by 6% in Spain, roughly 7% in Portugal and Ireland, 8.6% r output? In this t the answers to s are assumed to ner et al., 2010), eign to domestic nts can generate nous increase in s. As default risk Contents lists available at ScienceDirect journal homepage: Journal of Monetary Economics Journal of Monetary Economics 61 (2014) 143–147 0304-3932/$ - see front matter Published by Elsevier B.V. DOI of original article: n Correspondence address: Federal Reserve Bank of Chicago, 230 S La Salle Street, Chicago IL 60604-1413, United States. E-mail address: [email protected] 1 All of these data come from Eurostat0s Annual National Accounts database which includes a preliminary estimate for 2013. rises, E1 generates higher returns to domestic purchases of sovereign debt which are facilitated through E2. As a result of financial frictions E3, which limits the ability of domestic residents to borrow abroad to finance domestic investment, these What factors led to the sudden rise in spreads and the onset of the European sovereign debt crisi contribute to the contraction in economic activity? And if so, through what mechanism did the crisis lowe paper, Broner et al. (this issue) (hereinafter BEMV) propose a framework that is helpful in thinking abou these

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