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Sovereign Debt Crisis: Euro-Reality

Economic Imbalances and Institutional Changes to the Euro and the European Union

ISBN: 978-1-78714-510-8, eISBN: 978-1-78714-509-2

ISSN: 1569-3767

Publication date: 23 October 2017

Abstract

In the domestic credit market creditor and debtor rights are clearly defined. In contrast, sovereign debt repayment is largely contingent on the debtor government’s willingness to repay as enforcement of contracts at the international level is limited. In this chapter we explore different sources of sovereign debt crises as opportunistic and myopic behavior by debtor nations, over-consumption of imported goods, credit temptation by lenders eager to allocate savings surpluses, and unexpected consequences of initially seen appropriate policies. We explore how these factors have played out in the Euro-debt crisis and outline a framework for creditor responsibility to complement debtor self-restraint.

Keywords

Citation

Horvath, J. and Hernandez Sanchez, A. (2017), "Sovereign Debt Crisis: Euro-Reality", Economic Imbalances and Institutional Changes to the Euro and the European Union (International Finance Review, Vol. 18), Emerald Publishing Limited, Bingley, pp. 417-433. https://doi.org/10.1108/S1569-376720170000018019

Publisher

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Emerald Publishing Limited

Copyright © 2017 Emerald Publishing Limited