Is there Life in the Old Dog Yet? Observations on the Political Economy and Constitutional Viability of Common Debt Issuing in the Euro Area

Abstract

Departing from a political economy analysis of the benefits of common debt issuance by the Eurozone member states, we examine to what extent the various proposals for Eurobonds may be considered admissible under EU law and exemplary national (constitutional) laws, including those of Germany, Estonia, France, Ireland and Poland, from which one can deduce general national constitutional requirements applicable in all Eurozone member states. The medium and long-term potential gains from increased Eurozone stability and improved fiscal discipline must be traded off against the considerable legal and political obstacles of implementing any of these proposals. Yet key to the success of any common debt issuance is the effective dealing with the legacy debt of the Eurozone member states.