As I pointed out recently, 15 I am sceptical about this line of argument. Indeed, the strict Ricardian view may provide a more reasonable central estimate of the likely effects of consolidation. For a given expenditure, a shift from borrowing to taxation should have no real demand effects as it simply replaces future tax burden with current one.
Moreover, the acknowledgement of sovereign debt restructuring as a real possibility requires deeper reflections on sovereign debt restructuring mechanism for the euro area and would underpin the credibility on of the no bailout clause. As experience has shown, “the constructive ambiguity” with respect to the market interpretation of the no bailout clause embedded in the Treaties has not really been effective.