Article

 

Sovereign debt during the crisis: Comparative analysis between Eastern and Southern European countries (p.63-81)

by

Nikolay Nenovsky, CRIISEA, University of Picardie Jules Verne

Tsvetelina Marinova, New Bulgarian University

Keywords : Budget deficit, Sovereign debt, Financial crisis, New EU member states, Eurozone.

JEL classification : H62, H63, G01

Abstract

This study investigates budgetary positions and trends in sovereign debt levels in two groups of EU Member States during the global financial and economic crisis. We argue that current fiscal positions and trends in sovereign debt in the Baltic states and Bulgaria are above all due to the implemented exchange rate mechanism whereas in the southern European countries and Ireland it is the institutional framework of the eurozone that plays a key role for national budgetary policies and respectively debt trends. The existence of an insurance or guarantee fund in the eurozone makes the key difference between its hardly pegged exchange rates and Currency board and has led to the loosening of fiscal discipline especially in the South Europe.