Sovereign Debt and its Restructuring Framework in the Eurozone

Ashoka Mody

Chapter 10 in Managing Risks in the European Periphery Debt Crisis, 2015, pp 163-197 from Palgrave Macmillan

Abstract: Abstract Debt is a particularly serious macroeconomic problem in the eurozone. Public debt ratios are high by international historical standards, with no immediate prospect of a significant reduction. Private — corporate and household — debt ratios are either flat or rising. Banks remain fragile and impose a contingent liability on the public purse. The most stressed economies have not had the option of renewing economic growth through exchange rate depreciation and a boost to exports. Thus, fiscal austerity has been their principal instrument to achieve debt reduction. But since austerity also hurts growth, the debt-to-GDP ratios have barely budged. Persistent low growth has also created deflationary tendencies, which further raise the challenge of debt reduction.

Keywords: European Central Bank; Debt Ratio; Sovereign Debt; Debt Burden; Private Creditor (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-30495-7_10

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DOI: 10.1057/9781137304957_10

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