Banking and Debt Crises in Europe: The Dangerous Liaisons?
AbstractThe potential mutation of the Sub-Prime banking crisis into a sovereign debt one in Euro area countries is investigated. After reviewing the criteria used to measure the debt vulnerability, the balance sheet approach (BSA) is presented in order to illustrate the potential connections between these two types of crises. A graphical analysis yields evidence that at the end 2009 the probability of observing a Euro area country defaulting is less likely than six month before. Nevertheless, the serious threats, which concern Greece and Ireland, do not permit us to exclude the occurrence of a contagious, or self-fulfilling, sovereign debt or currency crises in Euro area in the future.
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Bibliographic InfoArticle provided by Springer in its journal De Economist.
Volume (Year): 158 (2010)
Issue (Month): 1 (April)
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Web page: http://www.springerlink.com/link.asp?id=100260
Banking crisis; Sovereign debt crisis; European Union; E32; F36;
Other versions of this item:
- Bertrand Candelon & Franz Palm, 2010. "Banking and Debt Crisis in Europe: The Dangerous Liaisons?," CESifo Working Paper Series 3001, CESifo Group Munich.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
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