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The Roots of the Eurozone Sovereign Debt Crisis: PIGS vs Non-PIGS

Author

Listed:
  • Abel L. Costa Fernandes

    () (Faculdade de Economia do Porto and NIFIP)

  • Paulo R. Mota

    () (Faculdade de Economia do Porto and NIFIP)

Abstract

The main purposes of this paper are twofold: on the one hand, to determine if there are significant differences of regime on public expenditures, total revenues and tax revenues between the so-called PIGS and the remaining Eurozone member states and, on the other hand, to uncover possible explanations for the quite different situations in which these countries find themselves nowadays. This work focus on the effect of the cyclical state of the economy, captured by the unemployment rate, and on the two fiscal rules imposed by the Maastricht Treaty on the Eurozone member states. Based on the estimated results, which distinguish between PIGS and non-PIGS countries, we come to the conclusion that the anti-cyclical reaction with respect to the unemployment rate is much stronger among non-PIGS. We also find that fiscal rules have, in general, not been obeyed by the two groups of countries. Moreover PIGS, in spite of their economic frailties, have, instead, tried to emulate the fiscal behavior of their more prosperous Eurozone partners instead of implementing more rigorous policies.

Suggested Citation

  • 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.
  • Handle: RePEc:por:fepwps:413
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    File URL: http://www.fep.up.pt/investigacao/workingpapers/11.05.19_wp413.pdf
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    Citations

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    Cited by:

    1. Francisco Rebelo & Ester Gomes da Silva, 2013. "Export variety, technological content and economic performance: The case of Portugal," Papers in Evolutionary Economic Geography (PEEG) 1310, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jun 2013.
    2. Chung-Fu Lai & Shan-Kai Tsa, 2015. "Diversified Currency Holdings and Exchange Rate Dynamics," International Journal of Economics and Financial Issues, Econjournals, vol. 5(3), pages 678-689.
    3. Mikhail Stolbov, 2014. "How Are Interbank and Sovereign Debt Markets Linked? Evidence from 14 OECD Countries, the Euro Area and Russia," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(3), pages 331-348, June.
    4. Gulbahar UCLER & Hale KIRMIZIOGLU, 2015. "The Reasons of Eurozone Sovereign Debt Crisis and an Empirical Analysis over Permanency of the Crisis," International Journal of Economics and Financial Issues, Econjournals, vol. 5(1), pages 86-96.
    5. repec:wsi:serxxx:v:62:y:2017:i:05:n:s021759081550099x is not listed on IDEAS
    6. Abel L. Costa Fernandes & Paulo R. Mota, 2013. "The Euro Zone Peripheral Countries’ Sovereign Debt Crisis: Also a Case of Non-Mature Democracies?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(3), pages 291-310, May.
    7. Nadezhda Ivanova, 2014. "Position and perspectives for enhancement of competitiveness in the Southern EU member-states five years after the beginning of the crisis," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 115-129.
    8. Dimitrios Dapontas, 2013. "Saving Euro by Dividing Europe in Multiple OCAs," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 9(2), pages 107-119, April.

    More about this item

    Keywords

    European public finance; fiscal policy; fiscal rules;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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