30 Apr 2010

Learning from the US experience

Daniel Gros

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In this short Commentary, Daniel Gros draws lessons for the Greek fiscal crisis from episodes in the United States history in the 18th and 19th centuries when the federal government was faced with the dilemma of bailing out insolvent states. In those cases, no widespread contagion ensued, leading him to conclude that a default within a federation does not necessarily have to trigger catastrophic political consequences.