scholarly journals Bid-to-cover and yield changes around public debt auctions in the euro area

2018 ◽  
Vol 87 ◽  
pp. 118-134 ◽  
Author(s):  
Roel Beetsma ◽  
Massimo Giuliodori ◽  
Jesper Hanson ◽  
Frank de Jong
Keyword(s):  
Euro Area ◽  
Public Debt

INTEREST RATE TARGETS AND SPECULATIVE ATTACKS ON PUBLIC DEBT

2018 ◽  
Vol 23 (07) ◽  
pp. 2698-2716 ◽  
Author(s):  
Pompeo Della Posta
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Euro Area ◽  
Public Debt ◽  
Nonlinear Behavior ◽  
Lender Of Last Resort ◽  
Speculative Attacks ◽  
The Interest Rate ◽  
Exchange Rate Target Zones ◽  
Primary Surplus

The application of exchange rate target zones modeling to interest rates allows interpreting the puzzles that emerged with the public debt euro area crisis, namely the nonlinear behavior of the interest rates and the fact that some stand-alone countries, not belonging to the euro area, have not been subject to speculative attacks in spite of equally large public debt-to-gross domestic product (GDP) ratios. As a matter of fact, this model shows that in the case of a noncredible upper threshold for the interest rate (that may be due to both the lack of room for increasing further the required government primary surplus and/or the absence of a monetary authority acting as a lender of last resort), the resulting public debt unsustainability determines an interest rate nonlinearity and makes the crisis possible for public debt levels that would be stable in the presence of a credible interest rate target.

scholarly journals The Resilience of the Euro

2021 ◽  
Vol 35 (2) ◽  
pp. 3-22
Author(s):  
Philip R. Lane
Keyword(s):  
Central Bank ◽  
Euro Area ◽  
Public Debt ◽  
Risk Premia ◽  
Policy Support ◽  
Economic Recovery ◽  
Common Currency ◽  
Institutional Reforms ◽  
Fiscal Capacity ◽  
The Common

Over 2014 – 2019, the euro area charted a substantial post-crisis economic recovery while also reducing macro-financial vulnerabilities. The array of post-crisis institutional reforms has improved the capacity of the euro area to withstand adverse shocks, even if the narrowing of imbalances also came at a high cost (especially in the most indebted member countries). The pandemic has provided a new test: the combination of a common central bank and the enlargement of the common fiscal capacity has provided substantial policy support and fostered a narrowing in risk premia, despite significant differences in levels of public debt and exposures to the pandemic shock. While the resilience of the euro is sure to be tested further in the coming years, the extent of the underlying political backing for the common currency should not be underestimated.

scholarly journals DEVELOPMENT OF PUBLIC DEBT IN THE SLOVAK REPUBLIC AND THE RISKS OF ITS DEEPENINING

2020 ◽  
pp. 63-70
Author(s):  
Eleonóra Matoušková
Keyword(s):  
Euro Area ◽  
Public Debt ◽  
Social Inequalities ◽  
Global Financial Crisis ◽  
Slovak Republic ◽  
Economic Recession ◽  
Economic Consequences ◽  
Economic Downturn ◽  
Government Deficits ◽  
The Global Financial Crisis

The problem of over-indebtedness began to manifest itself significantly in the Euro area in 2009. Permanent government deficits and the global financial crisis have increased public debt in many, especially the southern Euro area countries, well above the Maastricht criterions. The Slovak Republic is not one of the countries with disproportionaly high debt, but in the era of its autonomy, it had to deal with three periods when the debt was increasing. It was a period of transformation of the economy from centrally managed to market economy after 1993, a period of economic recession due to the global financial and economic crisis and the current coronavirus pandemic, accompanied by a deep economic downturn. The need to tackle a number of inadequate social inequalities is also puttig pressure on the public finances. The aim of this article is to assess development of public debt in Slovakia and to draw attention to the risks of its deepening. Slovakia achieved relatively high levels of economic growth. These periods have not been sufficiently used to reduce public debt, which currently accounts for 48% of GDP. While its share to GDP is falling, the absolute volume of debt is increasing. Economic consequences of the current global coronavirus pandemic will cause further growth in public debt. Slovakia did not take enough opportunity in good times to prepare for the crisis period.

Searching for new fiscal rules in the euro area: a new proposal

2021 ◽  
Vol 18 (2) ◽  
pp. 145-159
Author(s):  
Jan Priewe
Keyword(s):  
Interest Rates ◽  
Euro Area ◽  
Public Debt ◽  
Fiscal Rules ◽  
The European Union ◽  
Growth Pact ◽  
Fiscal Compact ◽  
The Face ◽  
The Stability ◽  
Interest Payments

While the European Union (EU) fiscal rules are suspended in the years 2020–2022, new rules are in the making and might be activated in 2023. If the old rules were used again, massive austerity would be required in the face of the strongly elevated level of public debt and the gap to the 60 per cent debt cap in the EU Treaty. A new proposal is suggested in this article which requires only small changes in the Treaty and/or the Fiscal Compact, but a strong overhaul in secondary law, that is, the Stability and Growth Pact. The key ideas are to use net interest payments, as a share of GDP, as the new metric for defining debt sustainability rather than gross public debt. This would allow the adjustment of the rules to changing monetary environments, especially interest-rate levels, and changing differentials between interest rates and growth rates. This way, much more fiscal space would be generated both for higher-debt and lower-debt member states and the entire euro area.

Rising Public Debt and the Need for Fiscal Consolidation in Europe

2010 ◽  
Vol 211 ◽  
pp. F27-F37
Keyword(s):  
European Union ◽  
Euro Area ◽  
Public Debt ◽  
Economic Activity ◽  
Negative Impact ◽  
The European Union ◽  
Fiscal Consolidation ◽  
The Third ◽  
Positive Growth ◽  
The Eu

The deepest, longest and most broadly-based recession the European Union has ever experienced appears to have come to an end. The third quarter of 2009 saw GDP in the EU increase by 0.3 per cent and economic activity in the Euro Area rose by 0.4 per cent. The recovery is expected to be broadly based across countries. After deep contractions registered in 2009 in all members of the EU (with the exception of Poland), all but four EU economies are expected to have recorded some growth in the second half of 2009. Greece, Ireland, Spain and Latvia suffered more than other EU economies, due to their intrinsic vulnerabilities, which reinforced the negative impact of the global shock. These economies are expected to record only moderate positive growth in 2011.

scholarly journals France

2019 ◽  
Vol 19 (245) ◽  
Author(s):  
Keyword(s):  
Labor Market ◽  
Euro Area ◽  
Public Debt ◽  
Structural Reform ◽  
Fiscal Deficit ◽  
Reform Agenda ◽  
On Demand ◽  
Domestic Reform ◽  
Global Growth ◽  
Potential Level

Growth slowed last year as the cyclical recovery ran its course and temporary domestic factors, coupled with slowing global growth, weighed on demand. Nonetheless, activity remained resilient relative to peers, and the labor market continued to improve. The fiscal deficit declined modestly, but public debt reached an all-time high. The government’s structural reform agenda is being put in place and growth is expected to gradually return to its potential level over the medium run. However, risks have risen, related to a disorderly Brexit, trade tensions, and a softening of activity in the euro area, but also to a slowdown in the domestic reform momentum.

scholarly journals The European Semester and Parliamentary Oversight Institutions Inside and Outside of the Euro Area

2021 ◽  
Vol 9 (3) ◽  
pp. 100-111
Author(s):  
Thomas Winzen
Keyword(s):  
Euro Area ◽  
Public Debt ◽  
Necessary Conditions ◽  
National Parliaments ◽  
Member States ◽  
Differentiated Integration ◽  
Maastricht Criteria ◽  
Parliamentary Oversight

The European Semester is a challenge for national parliaments but also an opportunity to reform domestic oversight institutions. Drawing on data from all member states, this study examines the conditions under which national parliaments use this opportunity. Is Euro area membership a prerequisite for parliamentary adaptation to the European Semester and, if so, which further combinations of conditions account for variation among Euro area countries? The analysis suggests that membership in or close ties with the Euro area and institutional strength constitute <em>necessary conditions</em> for parliamentary adaptation. Combined with other factors—in particular, public debt exceeding the Maastricht criteria—these conditions explain reform in many cases. National parliamentary adaptation to the European Semester thus follows existing institutional divisions constituted by differentiated integration in the Euro area and uneven national parliamentary strength.

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