The sovereign debt crisis: The case of Spain

Abstract

The sovereign debt crisis is often evoked as one of the main causes of the economic difficulties faced by net importing countries and as the rationale behind the austerity measures imposed on their residents. Nothing seems more evident than a country whose global, commercial and financial, imports exceed its global exports has to finance its deficit through a foreign loan. This inevitably leads to the formation of an external debt. Yet, things are less straightforward than they might appear, and a rigorous analysis is called for to verify whether any country' sovereign debt is ever justifiable. The paper shows that it is because net global imports are paid twice that net importing countries run up a sovereign debt. The case of Spain is symptomatic and provides statistical confirmation of the pathological increase in the country's external debt.

Las agencias de calificación y la deuda pública en la Comunidad Valenciana

“…Esto generaría una recuperación del equilibrio presupuestario y reduciría el nivel de deuda existente y esperada. En este sentido, las medidas sobre prudencia financiera a las que obliga la Ley de Estabilidad Presupuestaria han sido valoradas como positivas por el conjunto de agencias (Cencini, 2017).…”

Determinants of sovereign defaults

“…Compared to late 1980s and early 1990s when financial markets cooled down and sovereign defaults were few leading to less academic research on foreign borrowing crisis, the number of studies since 2014 on sovereign debt crisis have been regularly forthcoming in particular of European countries. Some of these studies include Ucler & Kirmizioglu (2015), Tamborini (2015), Broto & Perez-Quiros (2015), Popov & Van Horen (2015), Smeets (2016), Moisescu & Giurescu (2016), Stamatopoulos et al (2016), Gómez-Puig & Sosvilla-Rivero (2016), Afonso & Silva (2017), Cencini (2017), Reusens & Croux (2017), and Ehrmann & Fratzscher (2017). A significant number of these studies have used time series models to evaluate credit default swaps (CDS) and other similar instruments to assess the riskiness of a country due to the ever rising burden of sovereign debt.…”