IDEAS home Printed from https://ideas.repec.org/a/fst/rfsisf/v5y2020i9p124-133.html
   My bibliography  Save this article

Sovereign debt crisis management by the European Central Bank

Author

Listed:
  • Ioana Manuela Mîndrican

    (Bucharest University of Economic Studies, Bucharest, Romania)

Abstract

Following the bursting of the real estate crisis of 2007 and the financial crisis of 2008, the European Union faced another difficult situation, namely the sovereign debt crisis, when the euro was put to the test. The sovereign debt crisis is a widely debated and analyzed topic both in Romania and in Europe. Given the effects it generates, amid rising government debt and the instability of the banking system, it is important to know its causes, in order to subsequently identify the most effective measures to improve the economic situation in each affected state. This paper seeks to discuss the concept of sovereign debt crisis by conducting an analysis of government debt sustainability and the budget deficit in the European Union, as well as a forecast of government debt sustainability in Romania, reflecting the measures implemented by the Central Bank EU. According to the Maastricht criteria, the nominal convergence indicators, including the budget deficit and government debt, must be below the alert level, so that they are in line with European Union requirements. The level of the consolidated budget deficit must be less than 3%, and in terms of government debt, it must be below 60% of GDP. The rationale for choosing this theme is that the existence of such a crisis at European level can significantly affect the economic context of each Member State of the European Union (EU), in terms of the interconnection of the global financial system. This interconnection refers to the idea that, when a state becomes involved in the claim of sovereign debt, it indisputably endangers part of the external private debt. This concept is also called in the literature and contagion effect. The relevance of this theme lies in the analysis of the evolution of the main indicators that led to the onset of the sovereign debt crisis, as well as in the identification of its causes, in order to prevent enlargement.

Suggested Citation

  • Ioana Manuela Mîndrican, 2020. "Sovereign debt crisis management by the European Central Bank," Journal of Financial Studies, Institute of Financial Studies, vol. 9(5), pages 124-133, November.
    • Handle: RePEc:fst:rfsisf:v:5:y:2020:i:9:p:124-133
    DOI: 10.6084/m9.figshare.13621871
    as

    Download full text from publisher

    File URL: https://revista.isfin.ro/wp-content/uploads/2020/11/15_MindricanIoana_eng.pdf
    Download Restriction: no
    File URL: https://revista.isfin.ro/en/2020/11/17/impactul-covid-19-asupra-pietei-de-capital-din-romania-o-evaluare-a-indicelui-bet-si-a-actiunilor-brd-snp-tlv-fp-snp-catalina-camelia-joldes-2/
    Download Restriction: no
    File URL: https://libkey.io/10.6084/m9.figshare.13621871?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Blyth, Mark, 2015. "Austerity: The History of a Dangerous Idea," OUP Catalogue, Oxford University Press, number 9780199389445.
    2. Haytham Y.M. Ewaida, 2017. "The Impact of Sovereign Debt on Growth: An Empirical Study on GIIPS versus JUUSD Countries," European Research Studies Journal, European Research Studies Journal, vol. 0(2A), pages 607-633.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blazevic, Branko, 2019. "Humanizing The Economy," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 10(1), pages 1-21.
    2. Pompeo Della Posta & Mario Morroni, 2022. "The credibility of monetary policy and the fiscal response to the pandemic in the Eurozone," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 77-96, April.
    3. Saungweme, Talknice & Odhiambo, Nicholas M, 2019. "Relative impact of domestic and foreign public debt on economic growth in South Africa," Working Papers 25664, University of South Africa, Department of Economics.
    4. Rose, Wendy & McAuley, Colette, 2019. "Poverty and its impact on parenting in the UK: Re-defining the critical nature of the relationship through examining lived experiences in times of austerity," Children and Youth Services Review, Elsevier, vol. 97(C), pages 134-141.
    5. Pompeo Della Posta & Enrico Marelli & Marcello Signorelli, 2020. "A market‐financed and growth‐enhancing investment plan for the euro area," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 604-632, July.
    6. Vasileios Spyrakis & Stelios Kotsios, 2021. "Public debt dynamics: the interaction with national income and fiscal policy," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-22, December.
    7. Lokdam, Hjalte, 2020. "We serve the people of Europe: reimagining the ECB's political master in the wake of its emergency politics," LSE Research Online Documents on Economics 111873, London School of Economics and Political Science, LSE Library.
    8. Nur Hayati Abd Rahman & Shafinar Ismail & Eeng Ahman & Aas Nurasyiah & Neni Sri Wulandari, 2021. "The effect of regulatory performance on economic growth," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(3), pages 604-617, March.
    9. Neill Marshall & Stuart Dawley & Andy Pike & Jane Pollard & Mike Coombes, 2019. "An evolutionary perspective on the British banking crisis," Journal of Economic Geography, Oxford University Press, vol. 19(5), pages 1143-1167.
    10. Malte Dold & Tim Krieger, 2023. "The ideological use and abuse of Freiburg’s ordoliberalism," Public Choice, Springer, vol. 195(3), pages 341-361, June.
    11. Abdul Jalil, 2020. "Debt Sustainability: Economic Growth is the Panacea," PIDE Knowledge Brief 2020:19, Pakistan Institute of Development Economics.
    12. Passaris Constantine E., 2015. "A New Economic Governance Model for Greece in the 21st Century," Journal of Heterodox Economics, Sciendo, vol. 2(1), pages 1-28, June.
    13. Pompeo Della Posta & Enrico Marelli & Marcello Signorelli, 2022. "COVID-19, Economic Policies and Public Debt Sustainability in Italy," Sustainability, MDPI, vol. 14(8), pages 1-20, April.
    14. Talknice Saungweme & Nicholas M. Odhiambo, 2019. "Does Public Debt Impact Economic Growth in Zambia? An Ardl-Bounds Testing Approach," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 69(4), pages 53-73, October-D.
    15. Hjalte Lokdam, 2020. "‘We Serve the People of Europe’: Reimagining the ECB's Political Master in the Wake of its Emergency Politics," Journal of Common Market Studies, Wiley Blackwell, vol. 58(4), pages 978-998, July.
    16. Jan Priewe, 2021. "Reforming the Fiscal Rulebook for the Euro Area – and the Challenge of Old and New Public Debt," IMK Studies 72-2021, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    17. Duffy, David & McQuinn, Kieran & Morley, Ciara, 2015. "Quarterly Economic Commentary, Autumn 2015," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20153, June.
    18. Ho‐fung Hung, 2022. "The Virus, the Dollar, and the Global Order: The COVID‐19 Crisis in Comparative Perspective," Development and Change, International Institute of Social Studies, vol. 53(6), pages 1177-1199, November.
    19. Mastini, Riccardo & Kallis, Giorgos & Hickel, Jason, 2021. "A Green New Deal without growth?," Ecological Economics, Elsevier, vol. 179(C).
    20. McQuinn, Kieran, 2015. "European Fiscal Policy During the Crisis: An Irish Perspective," Research Notes RN2015/3/3, Economic and Social Research Institute (ESRI).

    More about this item

    Keywords

    sovereign debt crisis; euro; financial shocks; macroeconomic shocks;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fst:rfsisf:v:5:y:2020:i:9:p:124-133. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Cosmin Catalin Olteanu (email available below). General contact details of provider: https://edirc.repec.org/data/isfinro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.