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The effects of foreign debt and fiscal balance on economic performances during the Eurozone crisis

Shuttleworth, L.D. (2014) The effects of foreign debt and fiscal balance on economic performances during the Eurozone crisis.

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Abstract:In this project, the research question ‘Can the amount of foreign debt incurred by governments be considered as a more relevant variable than their fiscal balance in determining member states’ economic performances during the Eurozone Crisis?’ will be addressed. For this, three hypotheses have been formulated in order to test the influence of changes in fiscal balances and foreign debt levels on economic performances during the Eurozone Crisis. The context of the study is provided by the extensive implementation of austerity measures in EU member states since the onset of the crisis. The resulting academic debate, which is made up of supporters and critics of austerity as a response to the financial crisis, focuses on the respective effects of expansionary and contractionary fiscal measures to induce an improvement in economic performances. One train of thought which departs from this line of reasoning holds that the policy debate gives the role of fiscal balances too much focus and neglects other variables which might have a larger impact on economic performances. The neglected variable is foreign debt where the claim is that the amount of foreign debt a country holds is more important than its fiscal balance in determining its economic prospects. The research picks up on this claim and aims to examine whether foreign debt can be seen as a more relevant indicator which has not been given enough attention in the overall policy debate.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics
Programme:European Studies BSc (56627)
Link to this item:http://purl.utwente.nl/essays/65221
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