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Euro Area Scenarios and their Economic Consequences for Slovenia and Serbia

Author

Listed:
  • Klaus Weyerstrass

    (Institute for Advanced Studies, Vienna, Austria)

  • Daniela Grozea-Helmenstein

    (Institute for Advanced Studies, Vienna, Austria)

Abstract

Since 1999, divergences in international competitiveness led to an accumulation of current account deficits in the south and surpluses in the north of the euro area. With the aid of macroeconometric models, this paper estimates the effects of an exit of Greece or of all GIIPS countries (Greece, Italy, Ireland, Portugal, Spain) on the economies of Slovenia and Serbia. An exit of one or more countries would affect other economies via the trade channel and credit constraints. Euro area members would additionally suffer from an increase of public debt due to non-performing loans of the European Stability Mechanism and devaluations of public bonds purchased by the European Central Bank. An exit of Greece alone would only marginally affect the economies of Slovenia and Serbia. An exit of all GIIPS countries or a euro area breakup would have dramatic negative consequences for output, unemployment and public finances.

Suggested Citation

  • Klaus Weyerstrass & Daniela Grozea-Helmenstein, 2013. "Euro Area Scenarios and their Economic Consequences for Slovenia and Serbia," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 11(4 (Winter), pages 323-351.
    • Handle: RePEc:mgt:youmgt:v:11:y:2013:i:4:p:323-351
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    References listed on IDEAS

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    Cited by:

    1. Weyerstrass, Klaus, 2015. "Forecasting Accuracy of a Multi-Country Macroeconometric Model for the Former Yugoslavia/Capacidad predictiva de los modelos estructurales frente a modelos de series temporales. Aplicación a un sistem," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 33, pages 463-486, Mayo.

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    More about this item

    Keywords

    sovereign default; euro area break-up;

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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