Rating Sovereign Debt in a Monetary Union to be published in the Journal of Risk Finance

Joint work with Hans-Michael Trautwein on “Rating sovereign debt in a monetary union” is forthcoming in the Journal of Risk Finance, 16(3). It deals with the problem of “Original sin” as identified by Eichengreen, Hausmann and Panizza (2005) “The Pain of Original Sin” and transferred to the case of the Eurozone by Paul de Grauwe (2012) “The Governance of a Fragile Eurozone”. We estimate the extent of original sin in terms of a rating bonus before the global financial crisis and a malus thereafter. Rating agencies as well as many observers have come to realise the limitations of transferring monetary sovereignty to a supranational agency only over time – and after some “original sin”-related problems which were formerly only known to developing countries, occured in the midst of Europe. Read more in:

Körner, F.M. and Trautwein, H.-M. (2015) “Rating Sovereign Debt in a Monetary Union – Original Sin by Transnational Governance”, Journal of Risk Finance, Vol. 16, Issue 3