Conference on the economics of sovereign debt

Jun
23

Report

In the midst of this summer’s Greek debt crisis, the UBS Center organized a two-day conference on “The Economics of Sovereign Debt” on its own premises in Zurich. The conference took place on June 23−24 and was attended by over 60 specialists from universities, central banks, and other institutions (such as the IMF and UBS).

The numerous presentations by researchers and policymakers featured their latest findings, which both in terms of methodologies and focus themes covered a lot of ground. Ranging from theory papers to purely empirical contributions, presentation topics included debt restructuring options, the effect of financial liberalization, a history of haircuts, or the nexus between sovereign, bank, and private debt.

Shared insights

Amidst this diversity, a set of common themes and general insights emerged. Rather unexpectedly, there was widespread agreement on the detrimental effects of very high levels of sovereign debt (for a dissenting view, please refer to the research feature on Hans-Joachim Voth in this newsletter, which discusses positive effects of high debt levels). Also, it was widely acknowledged that there is much room for improvement, both in terms of how sovereign debt problems are modelled in economic theory as well as in terms of the existing databases for analyzing these problems. Finally, as far as Europe is concerned, one unifying theme was the key importance of the nexus between the monetary union and government debt.

Some clear policy prescriptions

One speaker who focused on that nexus was UBS Center Advisory Board member Harald Uhlig from the University of Chicago. In his talk, he argued that regulators in risky countries – like Greece – have an incentive to allow their banks to hold home risky bonds and risk defaults, while regulators in safe countries – like Germany – will impose tighter regulation. As a result, “governments in risky countries get to borrow more cheaply, effectively shifting the risk of some of the potential sovereign default losses on the European Central Bank.”

When asked by conference attendee Swiss TV (SRF), what he would advise Europe’s leaders for the then-ongoing negotiations with the Tsipras government, Uhlig’s position was clear: For the sake of the system, they should take a hard line, force Greece to comply with the rules, and should not allow for a debt write-down before reforms. Clearly a view that his compatriot in the German finance ministry seemed to have shared wholeheartedly.

In the midst of this summer’s Greek debt crisis, the UBS Center organized a two-day conference on “The Economics of Sovereign Debt” on its own premises in Zurich. The conference took place on June 23−24 and was attended by over 60 specialists from universities, central banks, and other institutions (such as the IMF and UBS).

The numerous presentations by researchers and policymakers featured their latest findings, which both in terms of methodologies and focus themes covered a lot of ground. Ranging from theory papers to purely empirical contributions, presentation topics included debt restructuring options, the effect of financial liberalization, a history of haircuts, or the nexus between sovereign, bank, and private debt.

Shared insights

Amidst this diversity, a set of common themes and general insights emerged. Rather unexpectedly, there was widespread agreement on the detrimental effects of very high levels of sovereign debt (for a dissenting view, please refer to the research feature on Hans-Joachim Voth in this newsletter, which discusses positive effects of high debt levels). Also, it was widely acknowledged that there is much room for improvement, both in terms of how sovereign debt problems are modelled in economic theory as well as in terms of the existing databases for analyzing these problems. Finally, as far as Europe is concerned, one unifying theme was the key importance of the nexus between the monetary union and government debt.

At one of the presentations in the UBS Center’s seminar room
At one of the presentations in the UBS Center’s seminar room
Harald Uhlig who spoke on “Sovereign Default Risk and Banks in a Monetary Union”
Harald Uhlig who spoke on “Sovereign Default Risk and Banks in a Monetary Union”

Program

Speakers

Federal Reserve of Minneapolis, Professor for Economics at the University of Minnesota
Manuel Amador

Manuel Amador is a Monetary Advisor at the Federal Reserve Bank of Minneapolis. He received his Ph.D. in Economics from the Massachusetts Institute of Technology in 2003. Thereafter, he has been a professor at Stanford University and at Harvard University.
His research focuses on macroeconomic theory and international economics.

Economist at the Federal Reserve of Minneapolis
Cristina Arellano

Cristina Arellano is a Senior Economist with the Federal Reserve Bank of Minneapolis. She received her Ph.D. in Economics in 2004 from Duke University. She was a professor at the Department of Economics at the University of Minnesota between 2004 and 2009.
Her research focuses on international macroeconomics, sovereign debt, and financial crises.

Assistant Professor of Economics at the Stanford University
Luigi Bocola

Luigi Bocola will be an Assistant Professor of Economics at Northwestern University as of July 2015. He received his Ph.D. in Economics from the University of Pennsylvania in 2014. He is a Research Economist at the Federal Reserve Bank of Minneapolis until June 2015.
His research focuses on macroeconomics, time series econometrics, and financial economics.

Professorin für Wirtschaftswissenschaften, Universität New York
Prof. Raquel Fernández

Raquel Fernández is Professor of Economics at New York University. She received her Ph.D. in Economics from Columbia University in 1988. She is an Affiliated Professor at University of Oslo, ESOP. Before moving to New York University, she has been a tenured professor at Boston University and the London School of Economics. She serves as an associate editor at the Journal of Economic Literature and has served as advisor to the World Bank’s WDR on Gender Equality and Development.
Her research focuses on sovereign debt, public economics, culture and economics, development and gender issues, inequality, and political economy.

S.K. and Angela Chan Chair in Global Management, Haas Schoof of Busniess at the University of California, Berkeley
Pierre-Olivier Gourinchas

Pierre-Olivier Gourinchas is a Professor of Economics at the University of California, Berkeley Economics Department. He received his Ph.D. in Economics from the Massachusetts Institute of Technology in 1996. He has been a professor at Stanford Graduate School of Business and Princeton University and a member of the French Council of Economic Advisors to the Prime Minister.
His research focuses on international macroeconomics and finance.

Neil Moskowitz Endowed Professor of Economics at University of Maryland
Prof. Şebnem Kalemli-Özcan

Sebnem Kalemli-Ozcan is a Neil Moskowitz Endowed Professor of Economics at the University of Maryland. She received her Ph.D. in Economics from Brown University in 2000. She was a professor at the University of Houston, a visiting Professor at Harvard, Koc, and Bilkent Universities and she held positions as Duisenberg Fellow at ECB, lead economist/ advisor at the World Bank Middle East Region, and senior research fellow at IMF.
Her research focuses on international macroeconomics, finance and growth, specifically linkages between firms and financial sector in a global capital market.

Centre de Recerca en Economia Internacional (CREI)
Alberto Martin

Alberto Martin is a Senior Economist at the International Monetary Fund. He received his Ph.D. in Economics from Columbia University in 2005. He is currently a Senior Researcher at CREi, and a Barcelona GSE Research Professor.
His research focuses on macroeconomic theory, international economics, and financial markets.

Professor für Makroökonomie, Universität Oslo
Prof. Kjetil Storesletten

Kjetil Storesletten is Professor of Economics at the University of Oslo. He received his Ph.D. in Economics from Carnegie Mellon University in 1995. From 2009 to 2012, he worked as a Monetary Advisor at the Federal Reserve Bank of Minneapolis. He has been a professor at the Institute for International Economic Studies during 1995 to 2003. He is the Chairman of the Review of Economic Studies and a member of the Executive Monetary Policy Committee at the Central Bank of Norway.
His research focuses on heterogeneity in macroeconomics and development.

Professor at Kiel University
Christoph Trebesch

Christoph Trebesch is Assistant Professor at the Department of Economics at the University of Munich. He received his Ph.D. in Economics from Free University Berlin in 2011.
His research focuses on international finance and international macroeconomics, political economy and law & economics.

Bruce Allen und Barbara Ritzenthaler Professor für Wirtschaftswissenschaften, Universität Chicago
Prof. Harald Uhlig

Harald Uhlig is Professor in Economics at the University of Chicago. He received his Ph.D. in Economics from the University of Minnesota in 1990. He has been a professor at Humboldt University and Tilburg University. Since 2007, he has been a consultant at the Federal Reserve Bank of Chicago and since 2013 at the European Central Bank. He is the lead editor of the Journal of Political Economy.
His research focuses on applied quantitative economics, in particular at the intersection of macroeconomics and financial economics.

Director of CREi Barcelona
Jaume Ventura

Jaume Ventura is a Senior Researcher at the Center for Research in International Economics (CREi), a Research Professor at the Barcelona GSE and a Professor at Universitat Pompeu Fabra (UPF). He received his Ph.D. in Economics at Harvard University in 1995. Previously, he held academic positions at the MIT and the University of Chicago. He served as a consultant to the IMF, the World Bank and the Inter-American Development Bank.
His research interests include international economics and macroeconomics.

Federal Reserve of Minneapolis, Professor for Economics at the University of Minnesota
Manuel Amador

Manuel Amador is a Monetary Advisor at the Federal Reserve Bank of Minneapolis. He received his Ph.D. in Economics from the Massachusetts Institute of Technology in 2003. Thereafter, he has been a professor at Stanford University and at Harvard University.
His research focuses on macroeconomic theory and international economics.

Economist at the Federal Reserve of Minneapolis
Cristina Arellano

Cristina Arellano is a Senior Economist with the Federal Reserve Bank of Minneapolis. She received her Ph.D. in Economics in 2004 from Duke University. She was a professor at the Department of Economics at the University of Minnesota between 2004 and 2009.
Her research focuses on international macroeconomics, sovereign debt, and financial crises.

Assistant Professor of Economics at the Stanford University
Luigi Bocola

Luigi Bocola will be an Assistant Professor of Economics at Northwestern University as of July 2015. He received his Ph.D. in Economics from the University of Pennsylvania in 2014. He is a Research Economist at the Federal Reserve Bank of Minneapolis until June 2015.
His research focuses on macroeconomics, time series econometrics, and financial economics.

Professorin für Wirtschaftswissenschaften, Universität New York
Prof. Raquel Fernández

Raquel Fernández is Professor of Economics at New York University. She received her Ph.D. in Economics from Columbia University in 1988. She is an Affiliated Professor at University of Oslo, ESOP. Before moving to New York University, she has been a tenured professor at Boston University and the London School of Economics. She serves as an associate editor at the Journal of Economic Literature and has served as advisor to the World Bank’s WDR on Gender Equality and Development.
Her research focuses on sovereign debt, public economics, culture and economics, development and gender issues, inequality, and political economy.

Venue

University of Zurich

Department of Economics, SOF-G-21, Schönberggasse 1, 8001 Zürich
(Google Maps)