scholarly journals The Euro zone peripheral countries’ sovereign debt crisis: Also a case of non-mature democracies?

2013 ◽  
Vol 60 (3) ◽  
pp. 291-310 ◽  
Author(s):  
Abel Fernandes ◽  
Paulo Mota
Keyword(s):  
Sovereign Debt ◽  
Debt Crisis ◽  
The Other ◽  
Sovereign Debt Crisis ◽  
Member States ◽  
Euro Zone ◽  
The One ◽  
The Relationship ◽  
Political Variables ◽  
Specific Contribution

The euro zone peripheral countries face a profound sovereign debt crisis threatening the very existence of the euro as we know it. Therefore, the study of the various factors contributing to this crisis is of the utmost importance. Given the set of the twelve initial member States, the euro zone peripheral countries (Portugal, Greece, and Spain) have in common the fact that they are recent democracies. Independently from other valid approaches to this question, the specific contribution of this paper is to focus on the role played by institutional and political variables in the behavior of fiscal variables. We show that the behavior of these variables is indeed statistically different from the one observed for the other euro zone countries, which are mature democracies. These outcomes are also in line with what that literature expects from the relationship between non-mature democracies and the incidence of election year budget cycles.

scholarly journals The Impact of the Introduction of Uniform European Collective Action Clauses on European Government Bonds as a Regulatory Result of the European Sovereign Debt Crisis

2020 ◽  
Vol 14 (1) ◽  
pp. 1
Author(s):  
Nicoletta Layher ◽  
Eyden Samunderu
Keyword(s):  
European Union ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Sovereign Debt Crisis ◽  
The European Union ◽  
Bond Yields ◽  
Member States ◽  
Sovereign Bond ◽  
European Sovereign Debt Crisis ◽  
Collective Action Clauses

This paper conducts an empirical study on the inclusion of uniform European Collective Action Clauses (CACs) in sovereign bond contracts issued from member states of the European Union, introduced as a regulatory result of the European sovereign debt crisis. The study focuses on the reaction of sovereign bond yields from European Union member states with the inclusion of the new regulation in the European Union. A two-stage least squares regression analysis is adopted in order to determine the extent of impact effects of CACs on member states sovereign bond yields. Evidence is found that CACs in the European Union are priced on financial markets and that sovereign bond yields do respond to the inclusion of uniform CACs in the European Union.

Eurobonds: Three Lessons from China’s “Debt Centralization/Decentralization” Experience

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Zhiyong An
Keyword(s):  
Moral Hazard ◽  
Euro Area ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Budget Constraint ◽  
Sovereign Debt Crisis ◽  
The European Union ◽  
Member States ◽  
Institutional Mechanism ◽  
Previous Series

Abstract Eurobonds, dubbed as Coronabonds in the context of the current coronavirus crisis, are being hotly debated among the euro area member states amid the COVID-19 pandemic. The debate is in many ways a retread of the euro area sovereign debt crisis of 2011–2012. As China’s “debt centralization/decentralization” experience is comparable with the introduction of Eurobonds in the European Union (EU) in terms of institutional mechanism design, we review our previous series of studies of China’s “debt centralization/decentralization” experience to shed some light on the Eurobonds debate. We obtain three key lessons. First, the introduction of Eurobonds in EU is likely to soften the budget constraint of the governments of the euro area member states. Second, it is also likely to strengthen the moral hazard incentives of the governments of the euro area member states to intentionally overstate their budget problems. Finally, the magnitudes of the moral hazard effects generated by the introduction of Eurobonds in EU are likely larger than their respective counterparts in China.

Challenging EU Legality

2021 ◽  
pp. 1-14
Author(s):  
Claire Kilpatrick ◽  
Joanne Scott
Keyword(s):  
Sovereign Debt ◽  
Debt Crisis ◽  
Legal Order ◽  
The Other ◽  
Political Organization ◽  
Sovereign Debt Crisis ◽  
European Court ◽  
Cast Doubt ◽  
Shed Light

This introduction explores what we mean when we talk about contemporary challenges to EU legality. Broadly, these involve actions or activities that cast doubt on the premises, principles, and norms that underpin the EU’s legal order as shaped by the Treaties and the judgments of the European Court. The chapter provides an initial taxonomy based on examples from the sovereign debt crisis and considers how the other contributions in the volume adjust or amplify that taxonomy. It shows that by looking at both ‘standard legality’ and legality exceptionalism in relation to EU legality, we can shed light both on the nature of the EU as a political organization and more specifically on the nature and role of law within it.

scholarly journals The recent sovereign debt crisis in the Euro zone: A matter of fundamentals?

2015 ◽  
Vol 65 (1) ◽  
pp. 1-25 ◽  
Author(s):  
Paulo Mota ◽  
Abel Costa Fernandes ◽  
Ana-Cristina Nicolescu
Keyword(s):  
Sovereign Debt ◽  
Debt Crisis ◽  
The United States ◽  
Cost Of Debt ◽  
Scale Model ◽  
Small Scale ◽  
Sovereign Debt Crisis ◽  
Euro Zone ◽  
Debt Dynamics ◽  
Systemic Crisis

The idea that the Euro zone sovereign debt crisis was caused by structural weaknesses degenerating into fundamental macroeconomic imbalances in the peripheral countries prevails among international institutions such as the IMF, the ECB, and the European Commission. On the contrary, some economists believe that this crisis is the consequence of major deficiencies in the architecture of economic policy making in the Euro zone that did not allow a proper response to a global systemic crisis of the financial markets that started in the United States. The objective of this paper is to provide a better understanding of the public debt dynamics in the EU, differentiating the case of Euro zone peripheral countries. We used quarterly data from 2000 to 2011 to estimate a small-scale model that takes into account the interactions between key variables. Our results do not support entirely the official view. We conclude that the cause of the adverse debt dynamics unravelling after 2007 was a sharp GDP contraction, coupled with a substantial increase in the interest cost of debt finance due to higher self-fulfilling solvency risks perceived by creditors, interacting with a higher sensitiveness of Euro zone peripheral countries to fundamentals.

scholarly journals Sovereign debt crisis of the Eurozone countries

2016 ◽  
Vol 7 (3) ◽  
pp. 357 ◽  
Author(s):  
Sławomir Miklaszewicz
Keyword(s):  
Euro Area ◽  
Sovereign Debt ◽  
Final Section ◽  
Debt Crisis ◽  
Sovereign Debt Crisis ◽  
Negative Consequences ◽  
The Public ◽  
Euro Zone ◽  
European Central ◽  
Coordination Process

The aim of the publication is to examine the fiscal position of the euro area countries and fiscal policy architecture in Europe after the outbreak of the financial and economic crisis started in 2008. The first part of the publication consists of the analyses of the budgetary situation of euro area countries and complications with the increasing costs of servicing the public debt in the European market affected by the financial liquidity crisis. In the second section the most important changes in the framework of budgetary policies coordination process in the euro zone are presented. The final section describes the role and activities of the European Central Bank in minimising the negative consequences of the debt crisis in the euro zone.

Greece and the Idolatry of Debt

2017 ◽  
Author(s):  
Martin Sandbu
Keyword(s):  
Monetary Union ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Detailed Examination ◽  
Sovereign Debt Crisis ◽  
Left Wing ◽  
Financial Transfers ◽  
The One ◽  
The Right

This chapter evaluates the case of Greece's sovereign debt crisis. Greece only makes up one-fiftieth of the eurozone economy. The problems it has caused the monetary union, however, are out of all proportion to its size. Greece is where the sovereign debt crisis started; and it is the one eurozone economy whose membership of the euro remains unsettled. That is why a detailed examination of Greece's travails is the right place to start a retelling of Europe's crisis. It reveals just how stubbornly the eurozone has stuck to the goal of trading financial transfers for more centralised power — from the first crisis in early 2010 to the renewed stand-off between Greece and the rest of the eurozone after left-wing radicals won power in Athens in January 2015.

Sign in / Sign up

Export Citation Format

Share Document