Hostname: page-component-848d4c4894-4hhp2 Total loading time: 0 Render date: 2024-05-02T09:01:59.254Z Has data issue: false hasContentIssue false
  • English
  • Français

Modelling the Sovereign Debt Crisis in Europe

Published online by Cambridge University Press:  26 March 2020

Dawn Holland ,
Simon Kirby  and
Ali Orazgani
Get access Rights & Permissions [Opens in a new window]

Extract

This note examines the impact of rising bond yields in certain Euro Area countries on debt sustainability. It concludes that without the financial assistance of the bailout packages, government debt in Greece would clearly have been unsustainable, while Ireland and Portugal would have been extremely vulnerable. We also examine the case of vulnerable countries which have not received bailouts — Italy, Spain and Belgium. We conclude that while they can absorb some temporary rise, as has been seen in recent weeks, a significant further sustained rise — more than 100–200 basis points — would call their solvency into question in the absence of financial assistance.

Type
The World Economy
Information
National Institute Economic Review , Volume 217 , July 2011 , pp. F37 - F45
Copyright
Copyright © 2011 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

CGFS (2011), ‘The impact of sovereign credit risk on bank funding conditions’, Committee on the Global Financial System Papers No. 43, Bank for International Settlements.Google Scholar
De Paoli, B., Hoggarth, G. and Saporta, V. (2009), ‘Output costs of sovereign defaults: some empirical estimates’, Bank of England Working Paper no. 362.Google Scholar
European Banking Authority (2011), 2011 EU-wide stress test, Aggregate Report.Google Scholar
European Central Bank (2007), Financial Integration in Europe, March.Google Scholar
Institute of International Finance (2011), Greece Financing Offer: statement by the IIF Board of Directors.Google Scholar
Ozler, S. (1993), ‘Have commercial banks ignored history?’, American Economic Review, 83, pp. 608–20.Google Scholar
Goldman Sachs (2011), European bank exposure to Greece revisited.Google Scholar
Goodman, L. (2011), ‘Solving the Greek Crisis’, Center for Financial Stability.Google Scholar