scholarly journals The Euro crisis. Causes and Symptoms

2015 ◽  
Vol 16 (32) ◽  
pp. 247-282
Author(s):  
Christoph S. Weber
Keyword(s):  
Fiscal Policy ◽  
Birth Defects ◽  
Current Account ◽  
Public Debt ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Sovereign Debt Crisis ◽  
Euro Crisis ◽  
International Financial Crisis ◽  
A Current

The Euro crisis is mainly a consequence of the international financial crisis of 2008. Thereby, the term Euro crisis is misleading as there is no currency crisis. First, the article shows some of the birth defects of the Euro. Second, it shows that the increase in public debt was caused by rescue measures for banks and anti-cyclical fiscal policy. Third, we argue that the Euro crisis is not just one crisis (a sovereign debt crisis) but it is a combination of several macroeconomic crises including a growth crisis, a labour market crisis, a public debt crisis, and a current account crisis.

The Transmission of the Great Recession (2008-2009) and the Sovereign Debt Crisis (2010-2012) to Latin America

2018 ◽  
pp. 19-42
Author(s):  
Roberto J. Santillán-Salgado ◽  
Edgardo A. Ayala-Gaytán
Keyword(s):  
Growth Performance ◽  
Latin American ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Sovereign Debt Crisis ◽  
The Great Recession ◽  
International Financial Crises ◽  
International Financial Crisis ◽  
Hypothetical Scenario ◽  
Econometric Evidence

In this work we discuss econometric evidence on four major issues that relate to the six largest Latin American economies (Argentina, Brazil, Chile, Colombia, Mexico, and Peru) during the two consecutive international financial crises between 2008 and 2012. Our first concern has to do with the mechanism of transmission of the international financial crisis and its secondary effects on the real and financial sectors of our sample countries. The second aspect that we explore refers to the actual magnitude of both, real and financial effects of the crisis. Our third objective has to do with an evaluation of the role played by individual countries' external macroeconomic vulnerability. And, finally, we propose a contra-factual analysis of the growth performance of our sample of Latin American economies, with the growth performance they would have experienced in a hypothetical scenario of no external turmoil.

scholarly journals When Governments Promise to Prioritize Public Debt: Do Markets Care?

2020 ◽  
Vol 6 (1) ◽  
pp. 41-74
Author(s):  
Mitu Gulati ◽  
Ugo Panizza ◽  
W Mark C Weidemaier ◽  
Gracie Willingham
Keyword(s):  
Public Debt ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Sovereign Debt Crisis ◽  
Bond Yields ◽  
Borrowing Costs ◽  
Absolute Priority ◽  
Sovereign Bond ◽  
European Sovereign Debt Crisis ◽  
The Us

Abstract During the European sovereign debt crisis of 2011–13, some nations faced with rising borrowing costs adopted commitments to treat bondholders as priority claimants. That is, if there were a shortage of funds, bondholders would be paid first. In this article, we analyse the prevalence and variety of these types of commitments and ask whether they impact borrowing costs. We examine a reform that was widely touted at the height of the Euro sovereign debt crisis in 2011, in which Spain enshrined in its constitution a strong commitment to give absolute priority to public debt claimants. We find no evidence that this reform had any impact on Spanish sovereign bond yields. By contrast, our examination of the US Commonwealth of Puerto Rico suggests that constitutional priority promises can have an impact, at least where the borrower government is subject to supervening law and legal institutions.

Europe’s (Euro) Crisis of Legitimacy

2021 ◽  
pp. 67-84
Author(s):  
Vivien A. Schmidt
Keyword(s):  
Economic Performance ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Sovereign Debt Crisis ◽  
Euro Crisis ◽  
Eurozone Crisis ◽  
Improved Performance ◽  
Institutional Actors ◽  
Over Time

Europe’s (euro) crisis of legitimacy stems from the European Union’s ‘governing by rules and ruling by numbers’ during the sovereign debt crisis. Rules-based governance focused on austerity and structural reform played havoc with the Eurozone economy while fuelling political discontent. Subsequent reinterpretation of the rules ‘by stealth’ may have improved performance, but it did nothing to change the suboptimal rules and only further contributed to EU and national politicization. Although general acknowledgement of increasing flexibility came as of 2015, along with quantitative easing and investment, the damage had been done. Legitimacy remained in question, understood not only with regard to economic performance (output) and political responsiveness (input), but also in terms of the quality of the governance procedures (throughput). The chapter begins by conceptualizing legitimacy, and then explores EU institutional actors’ different pathways to legitimacy, and the ways in which they responded to the Eurozone crisis over time. The chapter concludes with a discussion of how the EU appears to have learned the lessons of the Eurozone crisis during the Covid-19 crisis.

scholarly journals Public debt dynamics: the interaction with national income and fiscal policy

2021 ◽  
Vol 10 (1) ◽  
Author(s):  
Vasileios Spyrakis ◽  
Stelios Kotsios
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
National Income ◽  
Equation System ◽  
Policy Implications ◽  
Debt Dynamics ◽  
The 2008 Financial Crisis ◽  
New Perspective

AbstractThe 2008 financial crisis triggered the debt crisis in Europe. High debt-to-GDP ratios made it impossible for some countries to apply countercyclical policy in order to overcome the recession. As a result, highly indebted countries were forced to apply austerity measures to avoid sovereign default, which deepened even further the decline of their GDP. We examine the case of a highly indebted country, which is not cut off from the financial markets yet, using a bilinear difference equation system. We contemplate the dynamic equations of national income and sovereign debt together, as GDP fluctuations directly affect the debt evolution and we introduce the notion of the second relation, namely the deceleration of private investments due to sovereign debt. We build a new method for the implementation of fiscal policy, a feedback control of the economic system, and we stress its consequent policy implications. We contribute to the existing debt dynamics literature providing a new perspective for the interaction of public debt and GDP. The fiscal policy method we propose vanishes the dilemma between the front-loaded and back-loaded austerity, combines the fiscal recovery from a recession and the fiscal consolidation, as it immediately improves the debt-to-GDP ratio by increasing the national income and restraining the rise of public debt. Finally, we stress why the second relation is important for the implementation of fiscal policy, as its presence leads to a slower and more painful recovery.

scholarly journals The democratic deficit and European Central Bank crisis monetary policies

2019 ◽  
Vol 26 (1) ◽  
pp. 81-93 ◽  
Author(s):  
Anna-Lena Högenauer ◽  
David Howarth
Keyword(s):  
Central Bank ◽  
Sovereign Debt ◽  
European Central Bank ◽  
Policy Making ◽  
Debt Crisis ◽  
Democratic Legitimacy ◽  
Sovereign Debt Crisis ◽  
Monetary Policies ◽  
European Central ◽  
International Financial Crisis

This article presents the argument that European Central Bank (ECB) policy-making from the start of the sovereign debt crisis in 2010 undermined the democratic legitimacy of the ECB. We start with the argument – defended by a number of scholars including Majone and Moravcsik – that where European Union (EU) policy-making is technocratic and does not have significant redistributive implications it can benefit from depoliticization that does not undermine the democratic legitimacy of this policy-making. This is notably the case where EU institutions have narrow mandates and are constrained by super-majoritarian decision-making. Prior to the international financial crisis, the ECB’s monetary policies were shaped entirely by the interpretation that its mandate was primarily to ensure low inflation. From the outbreak of the sovereign debt crisis, the ECB adopted a range of policies which pushed its role well beyond that interpretation and engaged in a form of redistribution that directly undermined treaty provisions.

TAKING THE MEASURE OF CHANGING LABOUR MOBILIZATION AT THE INTERNATIONAL LABOUR ORGANISATION IN THE WAKE OF THE EU SOVEREIGN DEBT CRISIS

2019 ◽  
Vol 68 (3) ◽  
pp. 665-697 ◽  
Author(s):  
Claire Kilpatrick
Keyword(s):  
Human Rights ◽  
Sovereign Debt ◽  
Institutional Design ◽  
Debt Crisis ◽  
Sovereign Debt Crisis ◽  
Euro Crisis ◽  
International Labour Organisation ◽  
Legal Norms ◽  
Transnational Mobilization ◽  
The Eu

AbstractThis analysis investigates changing mobilization at the ILO in response to the labour and social rights shock created by EU and IMF demands in the EU sovereign debt crisis (Crisis Europe or euro-crisis). Mobilization means the purposeful use of legal norms and institutions by social movements and civil society groups to advance identified policy goals. It can be contrasted with the use of legal norms and institutions by individuals or entities to settle disputes affecting them. After introducing relevant features of euro-crisis and the ILO, the article develops an analysis that measures changing mobilization at the ILO during euro-crisis. It then shows how such an analysis makes two key contributions: first, to our understanding of the ILO and, second, to how we approach mobilization. First, by viewing the ILO as a rights mobilization structure, it shows the vitality and interest of doubted or neglected ILO supervision and complaints mechanisms. Five elements are underlined: the ILO is more than existing literature assumes; it questions the depiction of the ILO as a ‘toothless tiger’; the sharp divide between unions and NGOs is overstated; certain institutional design features make the ILO a good venue for transnational mobilization; the ILO is not transparent in terms of access to documents relevant to mobilization and compares poorly in this respect with UN Human Rights Treaty Bodies. Second, by setting it against existing literature, it is shown how measuring mobilization is distinctive within the broader human rights mobilization scholarship. The most important insights it introduces are: rejecting the assumption that mobilization inevitably follows a significant rights shock such as euro-crisis; addressing the puzzles of union ‘mobilization’ and motivation; operationalizing measurement of mobilization against the backdrop of venue choices; considering how to deal with an international organization which is both a mobilization venue and an engaged actor.

European Economies Stability Faced With Potential Outburst of Sovereign Debt Crisis. An Empirical Study Using Neural Network

2013 ◽  
Vol 12 (2) ◽  
pp. 3255-3260
Author(s):  
Stelian Stancu ◽  
Alexandra Maria Constantin
Keyword(s):  
Neural Network ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Banking System ◽  
Sovereign Debt Crisis ◽  
European Level ◽  
Continuous Growth ◽  
Economic Context ◽  
European Economies ◽  
The Impact

Instilment, on a European level, of a state incompatible with the state of stability on a macroeconomic level and in the financial-banking system lead to continuous growth of vulnerability of European economies, situated at the verge of an outburst of sovereign debt crises. In this context, the current papers main objective is to produce a study regarding the vulnerability of European economies faced with potential outburst of sovereign debt crisis, which implies quantitative analysis of the impact of sovereign debt on the sensitivity of the European Unions economies. The paper also entails the following specific objectives: completing an introduction in the current European economic context, conceptualization of the notion of “sovereign debt crisis, presenting the methodology and obtained empirical results, as well as exposition of the conclusions.

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