THE PRESENT SOVEREIGN DEBT CRISIS OF THE EURO ZONE PERIPHERAL COUNTRIES: A CASE OF NON-MATURE DEMOCRACIES AND LESS DEVELOPED ECONOMIES

Abel L. Costa Fernandes () and Paulo R. Mota
Additional contact information
Abel L. Costa Fernandes: Universidade do Porto - Faculdade de Economia
Paulo R. Mota: Universidade do Porto - Faculdade de Economia

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: The eurozone faces a profound sovereign debt crisis threatening the very existence of the euro. As a result, the recovery of the world economy has become more uncertain. Therefore, the study of the foundations of this crisis is of the utmost importance. Three of the countries involved, Portugal, Greece and Spain, share some important attributes: they are all recent democracies and comparatively less developed economies in the set of the twelve initial member States of the eurozone. For these three countries this paper shows that the behavior of the political variables emphasized by the literature as determining the performance of fiscal variables, is indeed statistically different from the ones observed for the other countries in difficulties, Ireland and Italy, which are mature democracies and comparatively developed economies. These outcomes are in line with what the relevant literature expects from countries with those characteristics, such as election year budget cycles. Besides, post-election year budget effects were also detected implying no fiscal consolidation.

Keywords: fiscal policy; political budget cycles; new democracies (search for similar items in EconPapers)
JEL-codes: H2 H5 H6 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2012-05
New Economics Papers: this item is included in nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.fep.up.pt/investigacao/workingpapers/wp458.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.fep.up.pt/investigacao/workingpapers/wp458.pdf [302 Found]--> https://fep.up.pt/investigacao/workingpapers/wp458.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:458

Access Statistics for this paper

More papers in FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto Contact information at EDIRC.
Bibliographic data for series maintained by ().