Belke, Ansgar; Dreger, Christian:
Ramifications of Debt Restructuring on the Euro Area: The Example of Large European Economies' Exposure to Greece
2011
In: DIW Diskussionspapiere = Discussion Papers / Deutsches Institut für Wirtschaftsforschung, Heft 1141, S. 1 - 21
Artikel/Aufsatz in Zeitschrift / Fach: Wirtschaftswissenschaften
Fakultät für Wirtschaftswissenschaften » Fachgebiet Volkswirtschaftslehre » Makroökonomik
Titel:
Ramifications of Debt Restructuring on the Euro Area: The Example of Large European Economies' Exposure to Greece
Autor(in):
Belke, Ansgar im Online-Personal- und -Vorlesungsverzeichnis LSF anzeigen; Dreger, Christian
Erscheinungsjahr
2011
Erschienen in:
DIW Diskussionspapiere = Discussion Papers / Deutsches Institut für Wirtschaftsforschung, Heft 1141, S. 1 - 21
ISSN
WWW URL

Abstract:

The Greek government budget situation plays a central role in the debt crisis in the euro area. The debt to GDP ratio is above 150 percent, while the deficit to GDP ratio exceeds 10 percent. To re‐establish the Maastricht criteria, respectively, strong consolidation measures need to be implemented, with potential adverse effects on the Greek economy, and further credit requirements. Therefore, a debt conversion might become a reasonable alternative. The aim of this paper is to provide some simulation‐based calculations on the expected fiscal costs for the governments in the large European countries Germany, France, Spain and Italy arising from different policy options – among them a potential second Greek rescue package. Under realistic conditions, a debt conversion may be the less costly strategy for Greece and the euro area partner states. A value‐added of these calculations lies in a potential transfer to smaller euro area member countries.