Euro Area Scenarios and their Economic Consequences for Slovenia and Serbia

Weyerstrass, Klaus and Grozea-Helmenstein, Daniela (2013) Euro Area Scenarios and their Economic Consequences for Slovenia and Serbia. Managing Global Transitions, 11 (4), pp. 323-351.

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Abstract or Table of Contents

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 break-up would have dramatic negative consequences for output, unemployment and public finances.

Item Type: Article in Academic Journal
Additional Information: Managing Global Transitions is an open access journal distributed under the terms of the Creative Commons CC BY-NC-ND 4.0 License.
Keywords: sovereign default, euro area break-up
Classification Codes (e.g. JEL): C54, F41
Status: Published
Related URLs:
Date Deposited: 22 May 2015 07:58
Last Modified: 01 Apr 2016 14:18
URI: http://irihs.ihs.ac.at/id/eprint/3287

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