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The Euro Zone Peripheral Countries’ Sovereign Debt Crisis: Also a Case of Non-Mature Democracies?

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Author Info

  • Abel L. Costa Fernandes

    ()
    (School of Economics and Business and NIFIP, University of Porto, Portugal)

  • Paulo R. Mota

    ()
    (School of Economics and Business and NIFIP, University of Porto, Portugal)

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    Abstract

    The euro zone peripheral countries face a profound sovereign debt crisis threatening the very existence of the euro as we know it. Therefore, the study of the various factors contributing to this crisis is of the utmost importance. Given the set of the twelve initial member States, the euro zone peripheral countries (Portugal, Greece, and Spain) have in common the fact that they are recent democracies. Independently from other valid approaches to this question, the specific contribution of this paper is to focus on the role played by institutional and political variables in the behavior of fiscal variables. We show that the behavior of these variables is indeed statistically different from the one observed for the other euro zone countries, which are mature democracies. These outcomes are also in line with what that literature expects from the relationship between non-mature democracies and the incidence of election year budget cycles.

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    Bibliographic Info

    Article provided by Savez ekonomista Vojvodine, Novi Sad, Serbia in its journal Panoeconomicus.

    Volume (Year): 60 (2013)
    Issue (Month): 3 (May)
    Pages: 291-310

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    Handle: RePEc:voj:journl:v:60:y:2013:i:3:p:291-310

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    Web page: http://www.panoeconomicus.rs/

    Related research

    Keywords: Fiscal policy; Political budget cycles; New democracies;

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    References

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    1. Abel L. Costa Fernandes & Paulo R. Mota, 2011. "The Roots of the Eurozone Sovereign Debt Crisis: PIGS vs Non-PIGS," FEP Working Papers 413, Universidade do Porto, Faculdade de Economia do Porto.
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    Cited by:
    1. Constantinos Alexiou & Joseph G. Nellis, 2013. "Challenging the Raison d’etre of Internal Devaluation in the Context of the Greek Economy," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(6), pages 813-836, December.

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